COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2016
Date: 2017-06-26
Institutions: Directorate-General for Budget, European Commission
Subjects: European Development Fund, balance sheet, closing of accounts, consolidated account, implementation of the budget

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 26.6.2017  COM(2017) 364 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS  ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2016  
 
 
Annual accounts of the  

European Development 

Fund 2016 

 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONTENTS 

CERTIFICATION OF THE ACCOUNTS .................................................................... 4 

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES ................................ 5 

FUNDS MANAGED BY THE EUROPEAN COMMISSION .............................................. 8 

FINANCIAL STATEMENTS OF THE EDF ............................................................ 10 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ....................................... 19 

REVENUE ................................................................................................... 36 

EXPENSES .................................................................................................. 37 

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF ........ 47 

FINAL ANNUAL ACCOUNTS OF THE BÊKOU EU TRUST FUND .............................. 48 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND .......................... 49 

FINAL ANNUAL ACCOUNTS OF THE EUTF FOR AFRICA ....................................... 55 

BACKGROUND INFORMATION ON THE EUTF FOR AFRICA .................................. 56 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS
 ................................................................................................................ 62 

EDF REPORT ON FINANCIAL IMPLEMENTATION ................................................ 67 

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANAGED BY THE EUROPEAN 
INVESTMENT BANK ......................................................................................... 81 

3 

 
 
 
 
Annual accounts of the European Development Fund 2016 

CERTIFICATION OF THE ACCOUNTS 

The  annual  accounts  of  the  European  Development  Fund  for  the  year  2016  have  been  prepared  in 
accordance with Title IX of the Financial Regulation of the 11th European Development Fund and with the 
accounting principles, rules and methods set out in annex to the financial statements. 

I  acknowledge  my  responsibility  for  the  preparation  and  presentation  of  the  annual  accounts  of  the 
European  Development  Fund  in  accordance  with  Article  20  of  the  Financial  Regulation  of  the  11th 
European Development Fund. 

I  have  obtained  from  the  authorising  officers  and  from  the  EIB,  who  guarantee  its  reliability,  all  the 
information  necessary  for  the  production  of  the  accounts  that  show  the  European  Development  Fund's 
assets and liabilities and the budgetary implementation. 

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the 
accounts,  I have a reasonable assurance that the accounts present a true  and fair view of  the financial 
position of the European Development Fund in all material aspects. 

[signed] 

Rosa ALDEA BUSQUETS 

Accounting Officer 

23 June 2017 

4 

 
 
 
 
 
Annual accounts of the European Development Fund 2016 

IMPLEMENTING AND ACCOUNTING FOR 
THE EDF RESOURCES 

1.  BACKGROUND 

The European Union (hereinafter referred to as the EU) has cooperative relations with a large number of 
developing countries. The main objective is to promote economic, social and environmental development, 
with  the  primary  aim  of  reducing  and  eradicating  poverty  in  the  long-term,  by  providing  beneficiary 
countries  with  development  aid  and  technical  assistance.  To  achieve  this,  the  EU  draws  up,  jointly  with 
the  partner  countries,  cooperation  strategies  and  mobilises  the  financial  resources  to  implement  them. 
These EU resources allocated to development cooperation come from three sources: 

- 
- 
- 

The EU budget; 
The European Development Fund; 
The European Investment Bank. 

The  European  Development  Fund  (hereinafter  referred  to  as  the  EDF)  is  the  main  instrument  for 
providing EU aid for development cooperation to the African, Caribbean and Pacific (hereinafter referred 
to as the ACP) States and Overseas Countries and Territories (hereinafter referred to as the OCTs). 

The  EDF  is  not  funded  by  the  EU  budget.  It  is  established  by  an  internal  agreement  of  the 
Representatives of the Member States, sitting within the Council, and managed by a specific committee. 
The  European  Commission  (hereinafter  referred  to  as  the  Commission)  is  responsible  for  the  financial 
implementation  of  the  operations  carried  out  with  EDF  resources.  The  European  Investment  Bank 
(hereinafter referred to as the EIB) manages the Investment Facility. 

During  the  period  2014-2020,  the  geographic  aid  granted  to  ACP  States  and  OCTs  will  continue  to  be 
mainly  funded  by  the  EDF.  Each  EDF  is  usually  concluded  for  a  period  of  around  five  years  and  is 
governed by its own Financial Regulation which requires the preparation of financial statements for each 
individual EDF. Accordingly, financial statements are prepared separately for each EDF in respect of the 
part that is managed by the Commission. These financial statements are also presented in an aggregated 
way so as to provide a global view of the financial situation of the resources for which the Commission is 
responsible. 

The  Internal  Agreement  establishing  the  11th  EDF  was  signed  by  the  participating  Member  States, 
meeting  within  the  Council,  in  June  20131.  It  came  into  force  on  1  March  2015.  In  order  to  assure 
continuity  between  the  end  of  the  10th  EDF  and  the  entry  into  force  of  the  11th  EDF,  the  Commission 
proposed transitional measures, known as the Bridging Facility (BF)2. The BF is presented under the 11th 
EDF. 

At  the  same  time  the  10th  EDF  Financial  Regulation3  was  amended  and  the  new  Financial  Regulation 
applicable  to  the  transition  period  was  adopted4.  They  entered  into  force  on  30  May  2014.  On  2  March 
2015  the  Council  adopted  the  11th  EDF  Financial  Regulation5  and  the  Implementation  Rules6.  They 
entered into force on 6 March 2015. 

1 OJ L 210, 6.8.2013, p. 1. 
2  The  creation  of  the  Bridging  Facility  had  been  first  proposed  as  an  article  of  the  11th  EDF  Implementation  Regulation 
(COM(2013)445). The Commission however has proposed, as an alternative, the creation of the Bridging Facility by a specific Council 
decision  (Proposal  for  a  Council  decision  regarding  transitional  EDF  management  measures  from  1  January  2014  until  the  entry  into 
force of the 11th EDF European Development Fund, COM(2013)663). 
3 Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th EDF. OJ L 78, 19.2.2008, 
p.1. 
4 Council Regulation (EU) No 567/2014 of 26 May 2014 amending Regulation (EC) No 215/2008 on the Financial Regulation applicable 
to the 10th EDF as regards the application of the transition period between the 10th EDF and the 11th EDF until the entry into force of 
the 11th EDF Internal Agreement. OJ L 157, 27.5.2014, p. 52. 
5 Council Regulation (EU) 2015/323 of 2 March 2015 on the financial regulation applicable to the 11th European Development Fund. OJ 
L 58, 3.3.2015, p. 17–38. 
6  Council  Regulation  (EU)  2015/322  of  2  March  2015  on  the  implementation  of  the  11th  European  Development  Fund.  OJ  L  58, 
3.3.2015, p. 1–16. 

5 

 
 
                                                 
 
Annual accounts of the European Development Fund 2016 

Within  the  framework  of  the  ACP-EU  Partnership  Agreement,  the  Investment  Facility  was  established. 
This Investment Facility is managed by the EIB and is used to support private sector development in the 
ACP States by financing essentially  – but not exclusively  – private investments. The Facility is designed 
as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a 
self-renewing  and  financially  independent  facility.  As  the  Investment  Facility  is  not  managed  by  the 
Commission,  it is  not  consolidated  in  the  first  part  of  the  annual  accounts  –  the  financial statements  of 
the EDF and the related report on financial implementation.  The  financial  statements  of  the Investment 
Facility  are  included  as  a  separate  part  of  the  annual  accounts  (part  II)  to  provide  a  full  picture  of  the 
development aid of the EDF7. 

2.  HOW IS THE EDF FUNDED? 

The European Council of 2 December 2013 adopted the Multi-annual Financial Framework for 2014-2020. 
In this context, it was decided that geographical cooperation with the ACP States would not be integrated 
into  the  EU  budget  (budgetised),  but  would  continue  to  be  funded  through  the  existing  inter-
governmental EDF. 

The EU budget is annual and according to the budgetary principle of annuality, expenditure and revenue 
are  planned  and  authorised  for  one  year.  Unlike  the  EU,  the  EDF  is  a  fund  operating  on  the  basis  of 
multiannuality.  Each  EDF  establishes  an  overall  fund  to  implement  development  cooperation  during  a 
period of usually five years. As resources are allocated on a multiannual basis, the allocated funds may 
be  used  over  the  period  of  the  EDF.  The  lack  of  budget  annuality  is  highlighted  in  the  budgetary 
reporting, where the budgetary implementation of the EDFs is measured against the total funds. 

The  EDF  resources  are  "ad  hoc"  contributions  from  the  EU  Member  States.  Approximately  every  five 
years,  Member  State  representatives  meet  at  intergovernmental  level  to  decide  on  an  overall  amount 
that will be allocated to the fund and to oversee its implementation. The Commission then manages the 
fund  in  accordance  with  the  Union  policy  on  development  cooperation.  Since  Member  States  have  their 
own  development  and  aid  policies  in  parallel  to  the  Union  policy,  the  Member  States  must  coordinate 
their policies with the EU to ensure they are complementary. 

In  addition  to  the  above  mentioned  contributions,  it  is  also  possible  for  Member  States  to  enter  into 
co-financing arrangements or to make voluntary financial contributions to the EDF. 

3. 

YEAR-END REPORTING 

3.1.  ANNUAL ACCOUNTS 

In accordance with Article 46 of the EDF Financial Regulation, the EDF financial statements are prepared 
on the basis of accrual-based accounting rules that themselves are based on International Public Sector 
Accounting  Standards  (IPSAS).  The  accounting  rules  adopted  by  the  Accounting  Officer  of  the 
Commission are applied by all the Institutions and bodies of the EU in order to establish a uniform set of 
rules for accounting, valuation and presentation of the accounts with a view to harmonising the process 
for drawing up the financial statements and consolidation, as required by Article 152 of the EU Financial 
Regulation. These EU accounting rules are also applied to the EDF while taking into account the specific 
nature of its activities.  

The preparation of the EDF annual accounts is entrusted to the Commission's Accounting Officer who is 
the Accounting Officer of the EDF. He/she ensures that the annual accounts of EDF present a true and fair 
view of the financial position of the EDF. 

The annual accounts are presented as follows: 

Part I: Funds managed by the Commission 

7 Council Regulation (EU) No 567/2014 of 26 May 2014 amending Regulation (EC) No 215/2008 on the Financial Regulation applicable 
to the 10th EDF as regards the application of the transition period between the 10th EDF and the 11th EDF until the entry into force of 
the 11th EDF Internal Agreement. OJ L 157, 27.5.2014, Art. 43. 

6 

 
 
                                                 
 
Annual accounts of the European Development Fund 2016 

(i)  Financial statements and explanatory notes of the EDF 

(ii)  Financial statements of the EU trust funds consolidated in the EDF 

(iii)  Consolidated financial statements of EDF and the EU trust funds 

(iv)  Report on financial implementation of the EDF 

Part II: Annual report on implementation - Funds managed by the EIB 

(i)  Financial statements of the Investment Facility 

The  part  'Financial  statements  of  the  European  trust  funds  consolidated  in  the  EDF'  includes  financial 
statements  of  the  two  trust  funds  created  under  the  EDF:  The  Bêkou  EU  Trust  Fund  (see  section 
'Financial statements of the Bêkou EU Trust Fund') and EU Trust Fund for Africa8 (see section 'Financial 
statements  of  EUTF  for  Africa').  The  trust  funds  individual  financial  statements  are  prepared  under  the 
responsibility of the EC Accounting Officer and subject to external audit carried out by a private auditor. 
The trust funds' financial statements included in these annual accounts are the final financial statements, 
i.e. after the necessary audit adjustments.  

It should be noted that the layout of the financial statements and the explanatory notes were changed in 
2016. The changes are purely in the presentation of the financial information and aim at giving a closer 
alignment  to  the  other  EU  entities'.  The  2015  comparative  amounts  are  presented  in  line  with  the  new 
format.  

The annual accounts are adopted by the Commission by 31 July of the subsequent year and presented to 
the European Parliament and to the Council for discharge. 

4.  AUDIT AND DISCHARGE 

4.1.  AUDIT 

The EDF annual accounts and resource management are overseen by its external auditor, the European 
Court of Auditors (hereinafter referred to as the ECA), which draws up an annual report for the European 
Parliament and the Council. 

4.2.  DISCHARGE 

The final control is the discharge of the financial implementation of the EDF resources for a given financial 
year. The European Parliament is the discharge authority of the EDF. This means that following the audit 
and  finalisation  of  the  annual  accounts  it  falls  to  the  Council  to  recommend  and  then  to  the  European 
Parliament  to  decide  whether  to  grant  discharge  to  the  Commission  for  the  financial  implementation  of 
the EDF resources for a given financial year. This decision is based on a review of the accounts and the 
annual  report  of  the  ECA  (which  includes  an  official  statement  of  assurance)  and  replies  of  the 
Commission, and also following questions and further information requests to the Commission. 

8The 2016 is the first year in which the financial statements of the EUTF for Africa are issued and thus also for the first time included in 
the EDF annual accounts. The transactions of 2015 are reflected in the comparative figures. 

7 

 
 
 
                                                 
 
Annual accounts of the European Development Fund 2016 

EUROPEAN DEVELOPMENT FUND 
FINANCIAL YEAR 2016 

FUNDS MANAGED BY THE EUROPEAN 
COMMISSION 

It should be noted that due to the rounding of figures into millions of euros, some financial data in the 
tables below may appear not to add-up. 

8 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONTENTS 

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES ........................................... 5 

FUNDS MANAGED BY THE EUROPEAN COMMISSION .......................................................... 8 

FINANCIAL STATEMENTS OF THE EDF ........................................................................ 10 

EDF BALANCE SHEET ........................................................................................... 11 

EDF STATEMENT OF FINANCIAL PERFORMANCE ....................................................... 12 

EDF CASHFLOW STATEMENT ................................................................................. 13 

EDF STATEMENT OF CHANGES IN NET ASSETS ........................................................ 14 

BALANCE SHEET BY EDF ....................................................................................... 15 

STATEMENT OF FINANCIAL PERFORMANCE BY EDF................................................... 16 

STATEMENT OF CHANGES IN NET ASSETS BY EDF ................................................... 17 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ............................................... 19 

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF ................... 47 

FINAL ANNUAL ACCOUNTS OF THE BÊKOU EU TRUST FUND .......................................... 48 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND .................................. 49 

BALANCE SHEET .................................................................................................. 51 

STATEMENT OF FINANCIAL PERFORMANCE ............................................................. 52 

CASHFLOW STATEMENT ....................................................................................... 53 

STATEMENT OF CHANGES IN NET ASSETS .............................................................. 54 

FINAL ANNUAL ACCOUNTS OF THE EUTF FOR AFRICA .................................................. 55 

BACKGROUND INFORMATION ON THE EUTF FOR AFRICA .......................................... 56 

BALANCE SHEET .................................................................................................. 58 

STATEMENT OF FINANCIAL PERFORMANCE ............................................................. 59 

CASHFLOW STATEMENT ....................................................................................... 60 

STATEMENT OF CHANGES IN NET ASSETS .............................................................. 61 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS .......... 62 

CONSOLIDATED BALANCE SHEET .......................................................................... 63 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE ...................................... 64 

CONSOLIDATED CASH FLOW STATEMENT ............................................................... 65 

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ....................................... 66 

EDF REPORT ON FINANCIAL IMPLEMENTATION ........................................................... 67 

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANAGED BY THE EUROPEAN INVESTMENT 
BANK ....................................................................................................................... 81 

9 

 
 
 
 
Annual accounts of the European Development Fund 2016 

FINANCIAL STATEMENTS OF THE EDF 

It should be noted that due to the rounding of figures into millions of euros, some financial data in the 
tables may appear not to add-up. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

EDF BALANCE SHEET 

NON-CURRENT ASSETS 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Called fund capital transfers between active EDFs 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

Note 

31.12.2016 

31.12.2015 

 EUR millions 

2.1 
2.2 

2.1 
2.3 
2.4 

2.5 
2.6 

2.7 
2.8 

2.9 
2.9 
2.9 

 409 
 98 

 507 

1 372 
 132 
 680 

2 184 
2 691 

 (4) 
 (6) 

 (10) 

 (549) 
 (776) 

(1 324) 
(1 334) 

 516 
 34 

 550 

1 145 
 171 
 504 

1 820 
2 370 

 (4) 
 (10) 

 (14) 

 (520) 
 (855) 

(1 376) 
(1 389) 

1 357 

 980 

42 323 
2 252 
– 
(40 146) 
(3 073) 
1 357 

38 873 
2 252 
– 
(36 994) 
(3 152) 
 980 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

EDF STATEMENT OF FINANCIAL PERFORMANCE 

REVENUE 
Revenue from non-exchange transactions 
Recovery of expenses 

Revenue from exchange transactions 
Financial income 
Other income 

Total Revenue 

EXPENSES 
Aid instruments 
Co-financing expenses 
Finance costs 
Other expenses 

Total Expenses 

Note 

3.1 

3.2 

3.3 
3.4 
3.6 
3.7 

2016 

EUR millions 

2015 

 8 

 8 

 3 
 62 

 66 

 73 

(2 970) 
 15 
 4 
 (196) 

(3 146) 

 90 

 90 

 8 
 42 

 50 

 140 

(3 059) 
 (69) 
 (1) 
 (162) 

(3 291) 

ECONOMIC RESULT OF THE YEAR 

(3 073) 

(3 152) 

12 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

EDF CASHFLOW STATEMENT 

Note 

2016 
 (3 073) 

EUR millions 

2015 
 (3 152) 

3 450 
 (64) 
 (120) 
 39 

– 
 (4) 
 28 
 (80) 

 177 

 177 

  504 

  680 

3 200 
 5 
 214 
  (87) 

 4 
 (24) 
 (179) 
  131 

 113 

 113 

  391 

  504 

Economic result of the year 
Operating activities 
Capital increase - contributions 
(Increase)/decrease in trust funds contributions 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
Increase/(decrease) in provisions 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred 
income 

NET CASHFLOW 

Net increase/(decrease) in cash and cash 
equivalents 
Cash and cash equivalents at the beginning of the 
year 
Cash and cash equivalents at year-end 

2.4 

2.4 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EDF STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2016 

Fund capital 
- active EDFs 
(A) 

Uncalled 
funds - 
active EDFs 
(B) 

BALANCE AS AT 31.12.2014 
Capital increase -  contributions 
Capital decrease - funds committed 
under the Bridging Facility 
Recognition of the 11th EDF capital 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Capital increase - contributions 
Economic result of the year 
BALANCE AS AT 31.12.2016 

45 691 

(1 595) 

29 367 
– 
73 464 

10 018 
(4 795) 

29 367 
– 
34 590 
(3 450) 

73 464 

31 140 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 
35 673 
4 795 
(1 595) 

– 
– 
38 873 
3 450 
– 
42 323 

Cumulative 
Reserves (D) 

(36 994) 
– 

(3 152) 
(40 146) 

(3 073) 
(43 219) 

Called fund 
capital from 
closed EDFs 
carried forward 
(E) 
2 252 
– 

– 
2 252 

2 252 

EUR millions 
Total Net Assets 
(C)+(D)+(E) 

 932 
4 795 
(1 595) 

– 
(3 152) 
 980 
3 450 
(3 073) 
1 357 

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

BALANCE SHEET BY EDF 

31.12.2016 

31.12.2015 

 EUR millions 

Note 

Eighth EDF 

Ninth EDF 

10th EDF 

11th EDF 

Eighth EDF 

Ninth EDF 

10th EDF 

11th EDF 

NON-CURRENT ASSETS 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-
exchange recoverables 
Liaison accounts 
Cash and cash equivalents 

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Liaison accounts 
Accrued charges and deferred 
income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed 
EDFs carried forward 
Called fund capital transfers 
between active EDFs 
Economic result carried forward 
from previous years 
Economic result of the year 
NET ASSETS 

2.1 
2.2 

2.1 
2.3 

2.3 
2.4 

2.5 
2.6 

2.7 
2.3 
2.8 

2.9 
2.9 

2.9 

– 
– 
– 

 1 
 1 

 196 
– 
 198 
 198 

– 
– 
– 

 (0) 
– 
 (1) 

 (1) 
 (1) 

 32 
– 
 32 

 50 
 71 

 424 
– 
 544 
 577 

– 
– 
– 

 (12) 
– 
 (93) 

 (104) 
 (104) 

 242 
– 
 242 

 909 
 59 

3 424 
– 
4 391 
4 633 

– 
 (6) 
 (6) 

 (438) 
– 
 (567) 

(1 005) 
(1 011) 

 135 
 98 
 232 

 412 
 2 

– 
 680 
1 094 
1 327 

 (4) 
– 
 (4) 

 (99) 
(4 043) 
 (115) 

(4 257) 
(4 261) 

 197 

 472 

3 622 

(2 934) 

– 
– 
– 

 3 
 1 

 214 
– 
 218 
 218 

– 
– 
– 

 (0) 
– 
 (3) 

 (3) 
 (3) 

 214 

 63 
– 
 63 

 67 
 65 

 657 
– 
 790 
 853 

– 
– 
– 

 (14) 
– 
 (114) 

 368 
– 
 368 

 879 
 103 

1 190 
– 
2 172 
2 541 

– 
 (10) 
 (10) 

 (492) 
– 
 (682) 

 (128) 
 (128) 

(1 174) 
(1 184) 

 84 
 34 
 118 

 195 
 2 

– 
 504 
 701 
 819 

 (4) 
– 
 (4) 

 (14) 
(2 062) 
 (57) 

(2 132) 
(2 136) 

 726 

1 357 

(1 317) 

12 164 
 627 

10 973 
1 625 

19 187 
– 

(2 496) 

2 214 

 247 

– 
– 

 35 

12 164 
 627 

(2 476) 

10 973 
1 625 

15 737 
– 

2 376 

 35 

– 
– 

 65 

(10 100) 

(14 248) 

(14 415) 

(1 382) 

(10 107) 

(14 223) 

(12 183) 

 (481) 

 2 
 197 

 (91) 
 472 

(1 397) 
3 622 

(1 587) 
(2 934) 

 6 
 214 

 (26) 
 726 

(2 232) 
1 357 

 (901) 
(1 317) 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF FINANCIAL PERFORMANCE BY EDF 

Annual accounts of the European Development Fund 2016 

2016 

2015 

EUR millions 

Note 

Eighth EDF  Ninth EDF 

10th EDF 

11th EDF 

Eighth EDF 

Ninth EDF 

10th EDF 

11th EDF 

REVENUE 
Revenue from non-exchange 
transactions 
Recovery of expenses 

Revenue from exchange 
transactions 
Financial income 
Other income 

Total revenue 
EXPENSES 
Aid instruments 
Co-financing expenses 
Finance costs 
Other expenses 
Total expenses 

ECONOMIC RESULT OF THE 
YEAR 

3.1 

3.2 

3.3 
3.4 
3.6 
3.7 

 1 
 1 

 (0) 
 2 
 2 
 3 

 2 
– 
 (0) 
 (3) 
 (1) 

5 
 5 

2 
17 
 19 
 23 

 (2) 
 (2) 

 2 
 40 
 43 
 41 

 4 
 4 

 (1) 
 3 
 2 
 7 

 (95) 
– 
 (0) 
 (19) 
 (114) 

(1 411) 
 15 
 4 
 (46) 
(1 437) 

(1 465) 
– 
 (0) 
 (129) 
(1 594) 

 1 
 1 

 (0) 
 3 
 3 
 4 

 5 
– 
 0 
 (3) 
 2 

 10 
 10 

 6 
 15 
 21 
 30 

 77 
 77 

 0 
 22 
 22 
 99 

 2 
 2 

 2 
 2 
 4 
 6 

 (47) 
– 
 7 
 (15) 
 (56) 

(2 197) 
 (68) 
 (8) 
 (58) 
(2 331) 

 (820) 
 (1) 
 (0) 
 (86) 
 (907) 

 2 

 (91) 

(1 397) 

(1 587) 

 6 

 (25) 

(2 232) 

 (901) 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN NET ASSETS BY EDF 

Annual accounts of the European Development Fund 2016 

Eighth EDF 

Fund capital 
- active 
EDFs (A) 

Uncalled 
funds - active 
EDFs (B) 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 

Cumulative 
Reserves 
(D) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 

BALANCE AS AT 31.12.2014 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2016 

12 840 
 (676) 

12 164 

12 164 

– 

– 

– 

12 840 
 (676) 

– 

– 
12 164 
– 
– 
– 
12 164 

 6 
(10 100) 

 2 
(10 098) 

(10 107) 

 627 

Called fund 
capital 
transfers 
between 
active EDFs 
(F) 
(3 147) 

 (6) 
 676 

(2 476) 
 (20) 
– 

 627 

 627 

(2 496) 

Ninth EDF 

Fund capital 
- active 
EDFs (A) 

Uncalled 
funds - active 
EDFs (B) 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 

Cumulative 
Reserves 
(D) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 

BALANCE AS AT 31.12.2014 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2016 

11 699 
 (727) 

10 973 

10 973 

11 699 
 (727) 

– 

– 
10 973 
– 
– 
– 
10 973 

(14 223) 

1 625 

 (26) 
(14 249) 

 (91) 
(14 339) 

1 625 

1 625 

– 
– 

– 

– 

17 

Called fund 
capital 
transfers 
between 
active EDFs 
(F) 
1 758 

 (109) 
 727 

2 376 
 (163) 
– 

2 214 

EUR millions 
Total Net 
Assets 
(C)+(D)+
(E)+(F) 

 214 
 (676) 

 (6) 
 676 
 6 
 214 
 (20) 
– 
 2 
 197 

EUR millions 
Total Net 
Assets 
(C)+(D)+
(E)+(F) 

 860 
 (727) 

 (109) 
 727 
 (26) 
 726 
 (163) 
– 
 (91) 
 472 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

10th EDF 

Fund capital 
- active 
EDFs (A) 

Uncalled 
funds - active 
EDFs (B) 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 

Cumulative 
Reserves 
(D) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 

BALANCE AS AT 31.12.2014 
Capital increase - contributions 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the Eighth and Ninth EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Capital increase - contributions 
Transfers to/from the Eighth and Ninth EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2016 

21 152 

 (192) 

10 018 
(4 795) 

20 960 

5 223 
(3 450) 

20 960 

1 773 

11 134 
4 795 
 (192) 

– 
– 
– 
15 737 
3 450 
– 
– 
– 
19 187 

(12 183) 

– 

(2 232) 
(14 415) 

(1 397) 
(15 812) 

– 

– 

11th EDF 

Fund capital 
- active 
EDFs (A) 

Uncalled 
funds - active 
EDFs (B) 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 

Cumulative 
Reserves 
(D) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 

BALANCE AS AT 31.12.2014 
Recognition of the 11th EDF capital in line with 
the Internal Agreement 
Transfers to/from the Eighth, Ninth and 10th 
EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Transfers to/from the Eighth, Ninth and 10th 
EDF 
Economic result of the year 
BALANCE AS AT 31.12.2016 

– 
29 367 

– 
(29 367) 

29 367 

(29 367) 

29 367 

(29 367) 

– 
– 

– 

– 
– 
– 

– 
– 

 (481) 

 (901) 
(1 382) 

(1 587) 
(2 969) 

18 

Called fund 
capital 
transfers 
between 
active EDFs 
(F) 
 (209) 

 84 
 160 

 35 

 182 
 30 

 247 

EUR millions 
Total Net 
Assets 
(C)+(D)+
(E)+(F) 

(1 258) 
4 795 
 (192) 

 84 
 160 
(2 232) 
1 357 
3 450 
 182 
 30 
(1 397) 
3 622 

Called fund 
capital 
transfers 
between 
active EDFs 
(F) 
1 597 

EUR millions 
Total Net 
Assets 
(C)+(D)+
(E)+(F) 

1 116 
– 

(1 532) 

(1 532) 

– 

– 

 65 
 (30) 

– 

 35 

 (901) 
(1 317) 
 (30) 

(1 587) 
(2 934) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

NOTES TO THE FINANCIAL STATEMENTS 
OF THE EDF 

It should be noted that due to the rounding of figures into millions of euros, some financial data in the 
tables may appear not to add-up. 

19 

 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

1. 

SIGNIFICANT ACCOUNTING POLICIES 

1.1.  ACCOUNTING PRINCIPLES 

The objective of financial statements is to provide information about financial position, performance and 
cash flows of an entity that is useful to a wide range of users.  

The  overall  considerations  (or  accounting  principles)  to  be  followed  when  preparing  the  financial 
statements  are  laid  down  in  EU  Accounting  Rule  1  'Financial  Statements'  and  are  the  same  as  those 
described  in  IPSAS  1:  fair  presentation,  accrual  basis,  going  concern,  consistency  of  presentation, 
materiality,  aggregation,  offsetting  and  comparative  information.  The  qualitative  characteristics  of 
financial reporting are relevance, reliability, understandability and comparability. 

1.2.  BASIS OF PREPARATION 

1.2.1.  Reporting period 

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 
December.  

1.2.2.  Currency and basis for conversion 

The annual accounts are presented in millions of euros, the euro being the EDF's functional and reporting 
currency. Foreign currency transactions are translated into euros using the exchange rates prevailing at 
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign 
currency  transactions  and  from  the  re-translation  at  year-end  exchange  rates  of  monetary  assets  and 
liabilities  denominated  in  foreign  currencies  are  recognised  in  the  statement  of  financial  performance. 
Different conversion methods apply to property, plant and equipment and intangible assets, which retain 
their value in euros at the date when they were purchased. 

Year-end balances of monetary assets and liabilities denominated in foreign currencies are translated into 
euros on the basis of the European Central Bank (ECB) exchange rates applying on 31 December. 

Euro exchange rates 
Currency 
BGN 
CZK 
DKK 
GBP 
HRK 
HUF 

31.12.2016 
1.9558 
27.0210 
7.4344 
0.8562 
7.5597 
309.8300 

1.2.3.  Use of estimates 

31.12.2015 
1.9558 
27.0230 
7.4626 
0.7340 
7.6380 
315.9800 

Currency 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

31.12.2016 
4.4103 
4.5390 
9.5525 
1.0739 
123.4000 
1.0541 

31.12.2015 
4.2639 
4.5240 
9.1895 
1.0835 
131.0700 
1.0887 

In accordance with IPSAS and generally accepted accounting principles, the financial statements 
necessarily include amounts based on estimates and assumptions by management based on the most 
reliable information available. Significant estimates include, but are not limited to; accrued and deferred 
income and charges, provisions, financial risk on accounts receivables, contingent assets and liabilities, 
and degree of impairment of assets. Actual results could differ from those estimates.  

Reasonable estimates are essential part of the preparation of financial statements and do not undermine 
their reliability. An estimate may need revision if changes occur in the circumstances on which the 
estimate was based or as a result of new information or more experience. By its nature, the revision of 
an estimate does not relate to prior periods and is not the correction of an error. The effect of a change in 
accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes 
known.  

20 

 
 
Annual accounts of the European Development Fund 2016 

1.3.  BALANCE SHEET 

1.3.1. 

Intangible assets 

Acquired  computer  software  licences  are  stated  at  historical  cost  less  accumulated  amortisation  and 
impairment  losses.  The  assets  are  amortised  on  a  straight-line  basis  over  their  estimated  useful  lives. 
The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime 
determined  by  an  agreement.  Internally  developed  intangible  assets  are  capitalised  when  the  relevant 
criteria  of  the  EU  accounting  rules  are  met.  The  costs  capitalisable  include  all  directly  attributable  costs 
necessary to create, produce, and prepare the asset to be capable of operating in the manner intended 
by  management.  Costs  associated  with  research  activities,  non-capitalisable  development  costs  and 
maintenance costs are recognised as expenses as incurred.  

1.3.2. 

Property, plant and equipment 

All  property,  plant  and  equipment  are  stated  at  historical  cost  less  accumulated  depreciation  and 
impairment  losses.  Historical  cost  includes  expenditure  that  is  directly  attributable  to  the  acquisition  or 
construction of the asset. Subsequent costs are included in the asset's carrying amount or recognised as 
a  separate  asset,  as  appropriate,  only  when  it  is  probable  that  future  economic  benefits  or  service 
potential  associated  with  the  item  will  flow  to  the  entity  and  its  cost  can  be  measured  reliably.  Repairs 
and maintenance costs are charged to the statement of financial performance during the financial period 
in  which  they  are  incurred.  Land  and  works  of  art  are  not  depreciated  as  they  are  deemed  to  have  an 
indefinite useful life. Assets under construction are not depreciated as these assets are not yet available 
for  use.  Depreciation  on  other  assets  is  calculated  using  the  straight-line  method  to  allocate  their  cost 
less their residual values over their estimated useful lives, as follows: 

Type of asset 
Buildings 
Plant and equipment 
Furniture and vehicles 
Computer hardware 
Other 

Straight line depreciation rate 

4 % to 10 % 
10 %  to 25 % 
10 % to 25 % 
25 % to 33 % 
10 % to 33 % 

Gains  or  losses  on  disposals  are  determined  by  comparing  proceeds  less  selling  expenses  with  the 
carrying amount of the disposed asset and are included in the statement of financial performance. 

Leases 

Leases of tangible assets, where the entity has substantially all the risks and rewards of ownership, are 
classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the 
fair  value  of  the  leased  asset  and  the  present  value  of  the  minimum  lease  payments.  The  interest 
element of the finance lease payment is charged to statement of financial performance over the period of 
the lease at a constant periodic rate in relation to the balance outstanding. The rental obligations, net of 
finance charges, are included in financial liabilities (non-current and current). The interest element of the 
finance cost is charged to the statement of financial performance over the lease period so as to produce a 
constant periodic interest rate on the remaining balance of the liability for each period. The assets held 
under finance leases are depreciated over the shorter of the assets' useful life and the lease term. 

Leases where the lessor retains a significant portion of the risks and rewards inherent to ownership are 
classified  as  operating  leases.  Payments  made  under  operating  leases  are  charged  to  the  statement  of 
financial performance on a straight-line basis over the period of the lease. 

1.3.3. 

Impairment of non-financial assets 

Assets  that  have  an  indefinite  useful  life  are  not  subject  to  amortisation/depreciation  and  are  tested 
annually  for  impairment.  Assets  that  are  subject  to  amortisation/depreciation  are  reviewed  for 
impairment whenever events or changes in circumstances indicate that the carrying amount may not be 
recoverable.  An  impairment  loss  is  recognised  for  the  amount  by  which  the  asset's  carrying  amount 
exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs 
to sell and its value in use. 

21 

 
 
Annual accounts of the European Development Fund 2016 

Intangible  assets  and  property,  plant  and  equipment  residual  values  and  useful lives  are  reviewed,  and 
adjusted if appropriate, at least once per year. An asset's carrying amount is written down immediately 
to  its  recoverable  amount  if  the  asset's  carrying  amount  is  greater  than  its  estimated  recoverable 
amount.  If  the  reasons  for  impairments  recognised  in  previous  years  no  longer  apply,  the  impairment 
losses are reversed accordingly. 

1.3.4. 

Financial assets 

The financial assets are classified in the following categories: financial assets at fair value through  profit 
or loss; loans and receivables; held-to-maturity investments; and available for sale financial assets. The 
classification  of  the  financial  instruments  is  determined  at  initial  recognition  and  re-evaluated  at  each 
balance sheet date. 

(i)  Financial assets at fair value through profit or loss 

A financial asset is classified in this category if acquired principally for the purpose of selling in the short 
term  or  if  so  designated  by  the  entity.  Derivatives  are  also  categorised  in  this  category.  Assets  in  this 
category  are  classified  as  current  assets  if  they  are  expected  to  be  realised  within  12  months  of  the 
balance sheet date. During this financial year, the entity did not hold any investments in this category. 

(ii)  Loans and receivables 

Loans  and  receivables  are  non-derivative  financial  assets  with  fixed  or  determinable  payments  that  are 
not quoted in an active market. They arise when the entity provides money, goods or services directly to 
a debtor with no intention of trading the receivable. They are included in non-current assets, except for 
maturities within 12 months of the balance sheet date. Loans and receivables include term deposits with 
the original maturity above three months. 

(iii)  Held-to-maturity investments 

Held-to-maturity  investments  are  non-derivative  financial  assets  with  fixed  or  determinable  payments 
and fixed maturities that the entity has the positive intention and ability to hold to maturity. During this 
financial year, the entity did not hold any investments in this category.  

(iv)  Available for sale financial assets 

Available  for  sale  financial  assets  are  non-derivatives  that  are  either  designated  in  this  category  or  not 
classified  in  any  of  the  other  categories.  They  are  classified  as  either  current  or  non-current  assets, 
depending on the period of time the entity expects to hold them, which is usually the maturity date.  

Initial recognition and measurement 

Purchases  and  sales  of  financial  assets  at  fair  value  through  profit  and  loss,  held-to-maturity  and 
available for sale are recognised on trade date - the date on which the entity commits to purchase or sell 
the  asset.  Cash  equivalents,  loans  and  term  deposits  are  recognised  at  settlement  date.  Financial 
instruments are initially recognised at fair value. For all financial assets not carried at fair  value through 
profit and loss transaction costs are added to the fair value at initial recognition. 

Financial instruments are derecognised when the rights to receive cash flows from the investments have 
expired or the entity has transferred substantially all risks and rewards of ownership to another party. 

Subsequent measurement 

Financial assets at fair value through profit and loss are subsequently carried at fair value with gains and 
losses  arising  changes  in  the  fair  value  being  included  in  the  statement  of  financial  performance  in  the 
period in which they arise. 

Loans and receivables and held-to maturity investments are carried at amortised cost using the effective 
interest method. 

Available  for  sale  financial  assets  are  subsequently  carried  at  fair  value.  Gains  and  losses  arising  from 
changes  in  the  fair  value  being  recognised  in  the  fairs  value  reserve.  Interest  on  available  for  sale 

22 

 
 
 
Annual accounts of the European Development Fund 2016 

financial assets calculated using the effective interest method is recognised in the statement of financial 
performance.  

The entity assesses at each balance sheet date whether there is objective evidence that a financial asset 
is  impaired  and  whether  an  impairment  loss  should  be  recorded  in  the  statement  of  financial 
performance.      

1.3.5. 

Pre-financing amounts 

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be 
split into a number of payments over a period defined in the particular contract, decision, agreement or 
basic legal act. The float or advance is either used for the purpose for which it was provided during the 
period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, he 
has the obligation to return the pre-financing advance to the entity. The amount of the pre-financing may 
be reduced (wholly or partially) by the acceptance of eligible costs (which are recognised as expenses). 

Pre-financing is, on subsequent balance sheet dates, measured at the amount initially recognised on the 
balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the 
period. 

1.3.6.  Receivables and recoverables 

As the EU accounting rules require a separate presentation of exchange and non-exchange transactions, 
for  the  purpose  of  drawing  up  the  accounts,  receivables  are  defined  as  stemming  from  non-exchange 
transactions  and  recoverables  are  defined  as  stemming  from  exchange  transactions  (when  the  entity 
receives value from another entity without directly giving approximately equal value in exchange). 

Receivables  from  exchange  transactions  meet  the  definition  of  financial  instruments  and  are  thus 
classified as loans and receivables and measured accordingly (see 1.3.4 above). 

Recoverables from non-exchange transactions are carried at original amount (adjusted for interests and 
penalties)  less  write-down  for  impairment.  A  write-down  for  impairment  is  established  when  there  is 
objective  evidence  that  the  entity  will  not  be  able  to  collect  all  amounts  due  according  to  the  original 
terms of the recoverables. The amount of the write-down is the difference between the asset's carrying 
amount  and  the  recoverable  amount.  The  amount  of  the  write-down  is  recognised  in  the  statement  of 
financial performance. 

1.3.7.  Cash and cash equivalents 

Cash and cash equivalents are financial instruments and include cash at hand, deposits held at call or at 
short notice with banks, and other short-term highly liquid investments with original maturities of three 
months or less. 

23 

 
 
Annual accounts of the European Development Fund 2016 

1.3.8. 

Provisions 

Provisions  are  recognised  when  the  entity  has  a  present  legal  or  constructive  obligation  towards  third 
parties as a result of past events, it is more likely than not that an outflow of resources will be required 
to  settle  the  obligation,  and  the  amount  can  be  reliably  estimated.  Provisions  are  not  recognised  for 
future operating losses. The amount of the provision is the best estimate of the expenditure expected to 
be  required  to  settle  the  present  obligation  at  the  reporting  date.  Where  the  provision  involves  a  large 
number  of  items,  the  obligation  is  estimated  by  weighting  all  possible  outcomes  by  their  associated 
probabilities ('expected value' method). 

1.3.9. 

Payables 

Included  under  accounts  payable  are  both  amounts  related  to  exchange  transactions  such  as  the 
purchase  of  goods  and  services  and  non-exchange  transactions  related  e.g.  to  cost  claims  from 
beneficiaries, grants or other EU funding.  

Where grants or other funding is provided to the beneficiaries, the cost claims are recorded as payables 
for  the  requested  amount  when  the  cost  claim  is  received.  Upon  verification  and  acceptance  of  the 
eligible costs, the payables are valued at the accepted and eligible amount. 

Payables  arising  from  the  purchase  of  goods  and  services  are  recognised  at  invoice  reception  for  the 
original  amount  and  corresponding  expenses  are  entered  in  the  accounts  when  the  supplies  or  services 
are delivered and accepted by the entity. 

1.3.10.  Accrued and deferred income and charges 

Transactions and events are recognised in the financial statements in the period to which they relate. At 
year-end,  if  an  invoice  is  not  yet  issued  but  the  service  has  been  rendered,  the  supplies  have  been 
delivered  by  the  entity  or  a  contractual  agreement  exists  (e.g.  by  reference  to  a  contract),  an  accrued 
income will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but 
the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue 
will be deferred and recognised in the subsequent accounting period. 

Expenses are also accounted for in the period to which they relate. At the end of the accounting period, 
accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. 
The  calculation  of  accrued  expenses  is  done  in  accordance  with  detailed  operational  and  practical 
guidelines issued by the Accounting Officer which aim at ensuring that the financial statements provide a 
faithful representation of the economic and other phenomena they purport to represent. By analogy, if a 
payment has been made in advance for services or goods that have not yet been received, the expense 
will be deferred and recognised in the subsequent accounting period.  

24 

 
 
 
 
Annual accounts of the European Development Fund 2016 

1.4.  STATEMENT OF FINANCIAL PERFORMANCE 

1.4.1.  Revenue 

Revenue comprises gross inflows of economic benefits or service potential received and receivable by the 
entity,  which  represents  an  increase  in  net  assets,  other  than  increases  relating  to  contributions  from 
owners.  

Depending  on  the  nature  of  the  underlying  transactions  in  the  statement  of  financial  performance  it  is 
distinguished between:   

(i)  Revenue from non-exchange transactions 

Revenue from non-exchange transactions are taxes and transfers because the transferor provides 
resources to the recipient entity without the recipient entity providing approximately equal value directly 
in exchange.  
Transfers are inflows of future economic benefits or service potential from non-exchange transactions, 
other than taxes. The entity shall recognise an asset in respect of transfers when the entity controls the 
resources as a result of a past event (the transfer) and expects to receive future economic benefits or 
service potential from those resources, and when the fair value can be reliably measured. An inflow of 
resources from a non-exchange transaction recognised as an asset (i.e. cash) is also recognised as 
revenue, except to the extent that the entity has a present obligation in respect of that transfer 
(condition), which needs to be satisfied before the revenue can be recognised. Until the condition is met 
the revenue is deferred and recognised as a liability (pre-financing received). 

(ii)  Revenue from exchange transactions 

Revenue  from  the  sale  of  goods  and  services  is  recognised  when  the  significant  risk  and  rewards  of 
ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving 
the provision of services is recognised by reference to the stage of completion of the transaction at the 
reporting date. 

1.4.2.  Expenses 

Expenses are decreases in economic benefits or service potential during the reporting period in the form 
of  outflows  or  consumption  of  assets  or  incurrence  of  liabilities  that  result  in  decreases  in  net 
assets/equity.  They  include  both  the  expenses  from  exchange  transactions  and  expenses  from 
non-exchange transactions.  

Expenses  from  exchange  transactions  arising  from  the  purchase  of  goods  and  services  are  recognised 
when the supplies are delivered and accepted by the entity. They are valued at original invoice amount. 
Furthermore,  at  the  balance  sheet  date  expenses  related  to  the  service  delivered  during  the  period  for 
which  an  invoice  has  not  yet  been  received  or  accepted  are  recognised  in  the  statement  of  financial 
performance.  

Expenses  from  non-exchange  transactions  account  for  the  majority  of  the  entity's  operating  expenses. 
They  relate  to  transfers  to  beneficiaries  and  can  be  of  three  types:  entitlements,  transfers  under 
agreement and discretionary  grants,  contributions and donations.  Transfers  are recognised as expenses 
in  the  period  during  which  the  events  giving  rise  to  the  transfer  occurred,  as  long  as  the  nature  of  the 
transfer is allowed by regulation or an agreement has been signed authorising the transfer; any eligibility 
criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made. 

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised 
as  an  expense  for  the  eligible  amount.  At  year-end,  incurred  eligible  expenses  due  to  the  beneficiaries 
but not yet reported are estimated and recorded as accrued expense. 

25 

 
 
 
Annual accounts of the European Development Fund 2016 

1.5.  CONTINGENT ASSETS AND LIABILITIES 

1.5.1.  Contingent assets  

A  contingent  asset  is  a  possible  asset  that  arises  from  past  events  and  of  which  the  existence  will  be 
confirmed  only  by  the  occurrence  or  non-occurrence  of  one  or  more  uncertain  future  events  not  wholly 
within  the  control  of  the  entity.  A  contingent  asset  is  disclosed  when  an  inflow  of  economic  benefits  or 
service potential is probable. 

1.5.2.  Contingent liabilities  

A contingent liability is a possible obligation that arises from past events and of which the existence will 
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly 
within the control of the entity; or a present obligation that arises from past events but is not recognised 
because: it is not probable that an outflow of resources embodying economic benefits or service potential 
will be required to settle the obligation or, in the rare circumstances where the amount of the obligation 
cannot be measured with sufficient reliability. 

1.6.  CO-FINANCING 

Co-financing  contributions  received  fulfil  the  criteria  of  revenues  from  non-exchange  transactions  under 
condition and they are presented as payables to Member States, non-Member States and others. The EDF 
is required to use the contributions to deliver services to third parties or is otherwise required to return 
the  assets  (the  contributions  received).  The  outstanding  payables  relating  to  co-financing  agreements 
represent  the  co-financing  contributions  received  less  the  expenses  incurred  related  to  the  project.  The 
effect on net assets is nil. 

Expenses  relating  to  co-financing  projects  are  recognised  as  they  are  incurred.  The  corresponding 
amount of contributions is recognised as operating revenue and the effect on economic result of the year 
is nil. 

26 

 
 
 
Annual accounts of the European Development Fund 2016 

2.  NOTES TO THE BALANCE SHEET 

 ASSETS 

2.1.  PRE-FINANCING 

 Many  contracts  provide  for  payments  of  advances  before  the  commencement  of  works,  delivery  of 
supplies or the provision of services. Sometimes the payment schedules of contracts foresee payments 
on  the  basis  of  progress  reports.  Pre-financing  is  normally  paid  in  the  currency  of  the  country  or 
territory where the project is executed. 

The  timing  of  the  recoverability  or  utilisation  of  pre-financing  governs  whether  it  is  disclosed  as  a 
current  or  a  non-current  pre-financing  asset.  The  utilisation  is  defined  by  the  project's  underlying 
agreement. Any repayments or utilisation due within twelve months of the reporting date are disclosed 
as current pre-financing. As many of the EDF projects are long-term in nature, it is necessary that the 
related advances are available for more than one year. Thus some pre-financing amounts are shown as 
non-current assets. 

EUR millions 

Non-current pre-financing 
Current pre-financing 
Total 

Note 

2.1.1 
2.1.2 

Eighth 
EDF 
– 
 1 
 1 

Ninth 
EDF 
 32 
 50 
 82 

10th 
EDF 
 242 
 909 
1 151 

11th 
EDF 
 135 
 412 
 546 

31.12.2016 

31.12.2015 

 409 
1 372 
1 781 

 516 
1 145 
1 661 

2.1.1.  Non-current pre-financing 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 

EIB and EIF 
International organisations 
Private law bodies with a public service mission 
Public law bodies 
Third countries 

Total 

2.1.2.  Current pre-financing 

Pre-financing (gross) 
Cleared via cut-off 
Total 

Eighth EDF  Ninth EDF 

 9 
 (8) 
 1 

 231 
 (181) 
 50 

10th EDF 
2 945 
(2 037) 
 909 

31.12.2016 
 71 

EUR millions 
31.12.2015 
 65 

 39 
 4 
 29 
 338 

 180 
 87 
 25 
 13 
 34 
 409 

 43 
 1 
 21 
 451 

 323 
 90 
 3 
 10 
 25 
 516 

EUR millions 

11th EDF  31.12.2016  31.12.2015 
4 745 
(3 373) 
1 372 

4 250 
(3 105) 
1 145 

1 560 
(1 148) 
 412 

EUR millions 

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
Annual accounts of the European Development Fund 2016 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 

EIB and EIF 
International organisations 
Private law bodies with a public service mission 
Public law bodies 
Third countries 

Total 

31.12.2016 
 246 

31.12.2015 
 283 

 115 
 10 
 122 
1 125 

 372 
 432 
 121 
 53 
 148 
1 372 

 123 
 1 
 159 
 861 

 235 
 336 
 5 
 56 
 229 
1 145 

The  overall  pre-financing  at  31  December  2016  (EUR  1  781  million)  is  comparable  to  the  total  pre-
financing at 31 December 2015 (EUR 1 661 million). 

The  slight  increase  in  current  pre-financing  by  EUR  227  million  compared  to  31  December  2015  is 
explained  by  a  large  number  of  new  contracts  for  which  no  costs  were  yet  incurred  in  2016.  This 
increase is offset by a decrease of the long term pre-financing (see note 2.1.1). 

2.1.3.  Guarantees received in respect of pre-financing 

Guarantees are held to secure pre-financing and are released  when the final claim under a project is 
paid. At 31 December 2016 the guarantees received by the EDF in respect of pre-financing amounted 
to EUR 53 million (2015 EUR 83 million). 

The majority of pre-financing is paid under the indirect management mode. In this case the beneficiary 
of the guarantee is not the EDF but the contracting authority.  

2.2.  TRUST FUND CONTRIBUTIONS 

This heading represents the amount paid as contributions to the Bêkou EU Trust Fund and the EUTF for 
Africa. The contributions are net of the costs incurred by the trust funds and attributable to the EDF. 

The trust fund contributions are implemented by the EDF under the direct management mode. 

Trust Funds 

Africa 
Bêkou 
Total 

Net contribution at 
31.12.2015 

– 
 34 
 34 

Contributions 
paid in 2016 
 99 
– 
 99 

Allocation of TF's net 
expenses  2016 

 (27) 
 (8) 
 (35) 

EUR millions 

Net contribution 
at 31.12.2016 
 72 
 26 
 98 

28 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

2.3.  NON-EXCHANGE RECOVERABLES AND EXCHANGE 

RECEIVABLES 

Recoverables from non-exchange transactions 
Receivables from exchange transactions 
Total 

Note 
2.3.1 
2.3.2 

31.12.2016 
 62 
 70 
 132 

EUR millions 

31.12.2015 
 104 
 67 
 171 

2.3.1.  Recoverables from non-exchange transactions 

Member States 
Customers 
Public bodies 
Third states 
Write down 
Liaison accounts 
with EU 
institutions 
Total 

Eighth EDF 

– 
 4 
– 
 0 
 (3) 

– 

 1 

Ninth EDF 
 0 
 9 
 13 
 3 
 (17) 

10th EDF 
 40 
 6 
 10 
 1 
 (5) 

11th EDF 
– 
 0 
 0 
– 
– 

31.12.2016 
 40 
 18 
 23 
 4 
 (25) 

EUR millions 
31.12.2015 
 90 
 23 
 16 
 2 
 (29) 

– 

 8 

– 

 51 

 2 

 2 

 2 

 62 

 1 

 104 

Recoverables from Member States include ordinary contributions as well as amounts still to be received 
as  a  consequence  of  Bridging  Facility  adjustments.    The  activities  of  the  Bridging  Facility  were  financed 
through decommitted amounts from previous EDF's and the related capital movements were recorded in 
2015.  

The amounts are summarised in the table below: 

Member States 

Belgium 
Cyprus 
Czech Republic 
Greece 
Latvia 
Portugal 
Romania 
Slovenia 
United Kingdom 
Total 

Amounts to be 
received from 
MS 
 25 
 0 
 2 
 0 
 0 
 0 
 2 
 1 
 10 
40 

2.3.2.  Receivables from exchange transactions 

Amounts to be deducted 
from MS's contributions 

Net amount at 
31.12.2016 

EUR millions 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

 25 
 0 
 2 
 0 
 0 
 0 
 2 
 1 
 10 
40 

Accrued income 
Liaison accounts 
between EDFs 
Total 

Eighth EDF 

 0 

 196 

 196 

Ninth EDF 
 63 

10th EDF 
 7 

11th EDF 
 0 

31.12.2016 
 70 

EUR millions 
31.12.2015 
 67 

 424 

 487 

3 424 

(4 043) 

3 431 

(4 043) 

 (0) 

 70 

 0 

 67 

Included  under  accrued  income  are  primarily  amounts  of  accrued  interest  on  pre-financing  related  to 
projects (EUR 63 million) and related to the EU-Africa Trust Fund (EUR 7 million). 

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF9; this leads 
to  operations  between  the  various  EDFs,  which  are  balanced  out  in  the  liaison  accounts  between  the 
various EDF balance sheets. Liaison accounts are presented only in the individual EDFs. 

2.4.  CASH AND CASH EQUIVALENTS10 

Eighth 
EDF 

Ninth 
EDF 

10th 
EDF 

11th 
EDF 

31.12.2016 

EUR millions 
31.12.2015 

– 

– 

Special accounts:  
Financial institutions of 
Member States 
Current accounts:  
Commercial banks 
Democratic Republic Congo 
Special fund* 
Total 
 504 
*This balance represents the amounts available for the Democratic Republic of the Congo in accordance 
with the provisions of Council Decision 2003/583/EC7. 

 389 
– 

 389 
– 

 377 
 1 

 680 

 680 

 291 

 126 

 291 

– 
– 

– 
– 

– 
– 

– 

– 

– 

– 

The overall increase in cash and cash equivalents is mainly explained by the advance payment of the first 
2017 contributions by some Member States in December 2016. 

It should be noted that there are STABEX funds held by beneficiary ACP States and thus not included on 
the  EDF  balance  sheet.  STABEX  is  the  acronym  for  an  EU  compensatory  finance  scheme  to  stabilise 
export  earnings  of  the  ACP  countries.  Once  the  Commission  and  the  beneficiary  (ACP)  State  reach 
agreement on how the STABEX funds are to be utilised, a transfer convention is signed by both parties. 
In accordance with the provisions of Article 211 of the Lomé IV Agreement11 (as revised), the funds are 
transferred into an interest bearing double signature account (Commission and Beneficiary State) opened 
in the name of the ACP State. The funds remain in these double signature accounts until a Framework of 
Mutual  Obligations  (FMO)  justifies  a  transfer  for  a project.  The  Commission's  Authorising  Officer  retains 
the power of signature over the account in order to ensure that the funds are disbursed as intended. The 
funds  in  the  double  signature  accounts  are  the  property  of  the  ACP  State  and  are  consequently  not 
recorded  as  assets  in  the  EDF  accounts.  The  transfers  to  these  accounts  are  recorded  as  STABEX 
payments. See also note 3.1.1 for more information. 

With  the  aim  of  improving  the  presentation  in  the  2016  annual  accounts,  the  classification  of  financial 
insitutions and banks has been reviewed. The comparative figures for 2015 are disclosed accordingly. 

LIABILITIES 

2.5.  PROVISIONS 

Provisions 
Total 

Eighth 
EDF 
– 
– 

Ninth 
EDF 
– 
– 

10th 
EDF 
– 
– 

11th 
EDF 
 4 
 4 

EUR millions 

31.12.2016 

31.12.2015 

 4 
 4 

 4 
 4 

9  In  accordance  with  Article  59  of  the  Financial  Regulation  applicable  to  the  11th  European  Development  Fund,  the  treasury  is 
presented in the balance sheet of the 11th EDF. 

10  In  accordance  with  Article  59  of  the  Financial  Regulation  applicable  to  the  11th  European  Development  Fund,  the  treasury  is 
presented  in  the  balance  sheet  of  the  11th  EDF.  The  nature  of  the  various  bank  accounts  is  outlined  in  chapter  5,  Financial  Risk 
Management. 
11 OJ L 156, 29.5.1998, p. 3-106. 

30 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Annual accounts of the European Development Fund 2016 

The provision is the best possible estimation of the probable amount to be paid by the EDF to finance the 
orderly closure of the Centre de Development (CDE), decided by the ACP-EU Committee of Ambassadors 
(Decision No 4/2014 of 23 October 2014).  

The  amount  includes  court  cases  (EUR  1.2  million)  raised  against  the  CDE  and  the  remaining  expected 
cost of the passive phase (e.g. residual administrative tasks, other residual litigations, archive, etc) that 
started on 31 December 2016 (see note 4.3.2). 

2.6.  FINANCIAL LIABILITIES 

Co-financing - payables 
Total 

– 
– 

– 
– 

Eighth EDF  Ninth EDF 

10th EDF 
 6 
 6 

11th EDF  31.12.2016  31.12.2015 

– 
– 

 6 
 6 

 10 
 10 

EUR millions 

The change in the total co-financing liabilities is explained in the note 2.7.2.1. 

2.7.  PAYABLES 

Current payables 
Sundry payables 
Total 

Note 

2.7.1 
2.7.2 

Eighth 
EDF 

 0 
– 
 0 

Ninth 
EDF 
 12 
 (0) 
 12 

10th 
EDF 
 112 
 325 
 438 

11th 
EDF 
 97 
 2 
 99 

31.12.2016 

31.12.2015 

 222 
 327 
 549 

 180 
 340 
 520 

EUR millions 

2.7.1. 

 Current payables 

Suppliers 
Member States 
Third states 
Public bodies 
Other current payables 
Total 

Eighth 
EDF 
 0 
– 
 0 
 0 
 0 
 0 

Ninth 
EDF 
 11 
– 
 0 
 1 
 1 
 12 

10th 
EDF 
 69 
 0 
 29 
 18 
 (4) 
 112 

11th 
EDF 
 19 
– 
 61 
 14 
 4 
 97 

EUR millions 

31.12.2016 

31.12.2015 

 98 
 0 
 91 
 32 
 1 
 222 

 79 
 0 
 83 
 21 
 (3) 
 180 

Payables include cost statements received by the EDF relating to its grant activity. They are recorded for 
the  amount  being  claimed  from  the  moment  the  demand  is  received.  The  same  procedure  applies  to 
invoices  and  credit  notes  received  under  procurement  activities.  The  cost  claims  concerned  have  been 
taken  into  account  for  the  year-end  cut-off  procedures.  Following  the  cut-off  entries,  estimated  eligible 
amounts have been recognised in the statement of financial performance. 

2.7.2.  Sundry payables 

Co-financing payables 
Deferred fund capital 
contributions 
Other sundry payables 
Total 

Note 

2.7.2.1 
2.7.2.2 

2.7.2.3 

Eighth 
EDF 
– 
– 

Ninth 
EDF 
– 
– 

– 
– 

– 
– 

10th 
EDF 
 63 
 261 

– 
 324 

11th 
EDF 
 1 
– 

 2 
 3 

EUR millions 

31.12.2016 

31.12.2015 

 64 
 261 

 2 
 327 

 31 
 307 

 2 
 340 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

2.7.2.1.  Co-financing payables 

The breakdown of the non-current and current co-financing payables by Member State is summarized in 
the table below: 

Eighth EDF  Ninth EDF 

10th EDF 

11th EDF  31.12.2016  31.12.2015 

EUR millions 

Non-current co-
financing 
Belgium 
Germany 
United Kingdom 
Sweden 
Canada 

Current co-financing 
Belgium 
Denmark 
France 
Germany 
Netherlands 
Spain 
United Kingdom 
Sweden 
Canada 

Total 

– 
– 
– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

 2 
 0 
 1 
 2 
 0 
 6 

 3 
 1 
 37 
 1 
 1 
 3 
 11 
 7 
 0 
 63 
 69 

– 
– 
– 
– 
– 
– 

 1 
 0 
– 
– 
– 
– 
– 
– 
– 
 1 
 1 

 2 
 0 
 1 
 2 
 0 
 6 

 4 
 1 
 37 
 1 
 1 
 3 
 11 
 7 
 0 
 64 
 70 

 1 
 1 
 3 
 4 
 1 
 10 

 3 
 1 
 10 
 1 
 1 
 3 
 1 
 12 
 (1) 
 31 
 41 

The  total  non-current  and  current  co-financing  payables  increased  by  EUR  29  million  compared  to  the 
previous reporting period.  

During  2016,  new  co-financing  contributions  were  received  from  United  Kingdom  (EUR  9.4  million), 
Belgium (EUR 3.3 million) and Sweden (EUR 0.9 million).   

The total non-current and current co-financing payables increased by EUR 15 million in order to recognise 
revenue and expenses related to co-financed projects (see notes 3.1.2 and 3.4).  

2.7.2.2.  Deferred fund capital contributions 

United Kingdom 
Sweden 
Hungary 
Total 

Eighth EDF  Ninth EDF 
– 
– 
– 
– 

– 
– 
– 
– 

10th EDF 
 252 
– 
 9 
 261 

11th EDF  31.12.2016  31.12.2015 

EUR millions 

– 
– 
– 
– 

 252 
– 
 9 
 261 

 259 
 48 
– 
 307 

The heading deferred fund capital contributions relates to Member States' contributions paid in advance. 

2.7.2.3.  Other sundry payables 

Included under this heading are mainly unallocated cash receipts and returned payments. 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

2.8.  ACCRUED CHARGES AND DEFERRED INCOME 

Accrued charges 
Other accruals and 
deferrals 
Total 

Eighth 
EDF 

 1 

– 

 1 

Ninth EDF 

10th EDF 

11th EDF  31.12.2016  31.12.2015 

 93 

 (0) 

 93 

 567 

 (0) 

 567 

 110 

 6 

 115 

 770 

 6 

 776 

 853 

 2 

 855 

EUR millions 

Accrued  charges  comprise  estimated  operating  expenses  for  on-going  or  ended  contracts  without 
validated cost claims where the 2016  eligible expenses incurred by  beneficiaries of  EDF were estimated 
using  the  best  available  information  about  the  existing  contracts.  The  portion  of  the  estimated  accrued 
charges  which  relates  to  pre-financing  paid  has  been  recorded  as  a  reduction  of  the  pre-financing 
amounts (see note 2.1). 

NET ASSETS 

2.9.  FUND CAPITAL 

2.9.1.  Called fund capital – active EDFs 

Fund capital 
Uncalled fund capital 
Called fund capital 
31.12.2015 

Fund capital 
Uncalled fund capital 
Called fund capital 
31.12.2016 

Eighth 
EDF 
12 164 
 (0) 
12 164 

Ninth 
EDF 
10 973 
 (0) 
10 973 

10th 
EDF 
20 960 
(5 223) 
15 737 

11th 
EDF 
29 367 
(29 367) 
– 

EUR millions 
Total 

73 464 
(34 590) 
38 873 

12 164 
– 
12 164 

10 973 
 (0) 
10 973 

20 960 
(1 773) 
19 187 

29 367 
(29 367) 
– 

73 464 
(31 140) 
42 323 

The  fund  capital  represents  the  total  amount  of  contributions  from  Member  States  for  the  relevant  EDF 
fund as laid down in each of the Internal Agreements. The uncalled funds represent the initial allocation 
not yet called up from Member States. 

The  called  fund  capital  represents  the  amount  of  the  initial  allocations  which  have  been  called  up  for 
transfer to the treasury accounts by the Member States (see note 2.9.2 below).  

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

2.9.2.  Called and uncalled fund capital by Member State 

Contributions 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Luxemburg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
United Kingdom 
Total 

% 

2.41 
3.53 
0.14 
0.09 
0.51 
2.00 
0.05 
1.47 
19.55 
20.50 
1.47 
0.55 
0.91 
12.86 
0.07 
0.12 
0.27 
0.03 
4.85 
1.30 
1.15 
0.37 
0.21 
0.18 
7.85 
2.74 
14.82 
100.00 

Uncalled 
capital 
31.12.2015 
 126 
 184 
 7 
 5 
 27 
 104 
 3 
 77 
1 021 
1 071 
 77 
 29 
 48 
 672 
 4 
 6 
 14 
 2 
 253 
 68 
 60 
 19 
 11 
 9 
 410 
 143 
 774 
5 223 

Capital 
called in 
2016 
 (83) 
 (122) 
 (5) 
 (3) 
 (18) 
 (69) 
 (2) 
 (51) 
 (674) 
 (707) 
 (51) 
 (19) 
 (31) 
 (444) 
 (2) 
 (4) 
 (9) 
 (1) 
 (167) 
 (45) 
 (40) 
 (13) 
 (7) 
 (6) 
 (271) 
 (95) 
 (511) 
(3 450) 

EUR millions 
Uncalled 
capital 
31.12.2016 
 43 
 63 
 2 
 2 
 9 
 35 
 1 
 26 
 347 
 364 
 26 
 10 
 16 
 228 
 1 
 2 
 5 
 1 
 86 
 23 
 20 
 7 
 4 
 3 
 139 
 49 
 263 
1 773 

Capital called in 2016 comprises entirely calls from 10th EDF. The total amount composes of ordinary call 
(EUR 3 450 million). The capital of the Eighth and the Ninth EDF has been called up and received in its 
entirety. No capital has yet been called from 11th EDF.  

2.9.3.  Called fund capital from closed EDFs carried forward 

Funds transferred from closed 
EDFs 

Eighth 
EDF 
 627 

Ninth 
EDF 
1 625 

10th 
EDF 
– 

11th 
EDF 
– 

31.12.2016 

EUR millions 
31.12.2015 

2 252 

2 252 

This heading includes the resources transferred from closed EDFs to the Eighth and Ninth EDFs. 

34 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

2.9.4.  Called fund capital transfers between active EDFs 

Balance at 31.12.2014 
Transfer of decommitted 
amounts to the 10th EDF 
performance reserve from 
previous EDFs 
Transfer of decommitted 
amounts to the 11th EDF 
performance reserve from 
previous EDFs 
Transfer from the 10th and 11th 
performance reserves to the 
Bridging Facility 
Recoveries from the Bridging 
Facility to the 10th and 11th 
performance reserves 
Return of funds committed 
under the Bridging Facility 
Balance at 31.12.2015 
Transfer of decommitted 
amounts to the 10th EDF 
performance reserve from 
previous EDFs 
Transfer of decommitted 
amounts to the 11th EDF 
performance reserve from 
previous EDFs 
Transfer from the 11th 
performance reserve to the 
African Peace Facility (10th EDF) 
Balance at 31.12.2016 

Eighth 
EDF 
(3 147) 
 (6) 

Ninth 
EDF 
1 758 
 (109) 

10th 
EDF 
 (209) 
 114 

11th 
EDF 
1 597 
– 

– 

– 

– 

– 

– 

– 

 (32) 

 32 

 (41) 

 41 

 11 

 (11) 

 676 

 727 

 192 

(1 595) 

(2 476) 
 (20) 

2 376 
 (163) 

 35 
 182 

 65 

– 

– 

– 

 (356) 

 356 

– 

 386 

 (386) 

(2 496) 

2 214 

 247 

 35 

EUR millions 
Total 

– 
– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

This heading includes the resources transferred between the active EDFs. 

Since the entry  into force of  the Cotonou  Agreement,  all the unspent funds in  previous active EDFs are 
transferred to the most recently opened EDF after decommitment. The resources transferred from other 
EDFs  increase  the  appropriations  of  the  receiving  fund  and  reduce  the  appropriations  of  the  fund  of 
origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only 
under specific conditions set out in the Internal Agreements.   

In  2016  EUR  386  million  was  taken  from  the  11th  Performance  reserve  to  finance  the  African  Peace 
Facility under the 10th EDF. 

35 

 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.  NOTES  TO  THE  STATEMENT  OF  FINANCIAL 

PERFORMANCE 

REVENUE 

Revenue from non-exchange transactions 
Revenue from exchange transactions 
Total 

Note 
3.1 
3.2 

2016 
 8 
 66 
 73 

EUR millions 

2015 
 90 
 50 
 140 

3.1.  REVENUE FROM NON-EXCHANGE TRANSACTIONS 

Recovery of expenses 
Recovery of STABEX funds 
Co-financing revenue 
Total 

Note 

3.1.1 
3.1.2 

Eighth 
EDF 
 0 
 1 
– 
 1 

Ninth 
EDF 
 5 
– 
– 
 5 

10th 
EDF 
 13 
– 
 (15) 
 (2) 

11th 
EDF 
 4 
– 
– 
 4 

EUR millions 

2016 

2015 

 23 
 1 
 (15) 
 8 

 20 
 1 
 69 
 90 

The non-exchange revenue can be broken down by management mode as follows: 

Direct Management 
Implemented by: 
Commission 
EU delegations 

Indirect Management 
Implemented by : 

Third countries 
International organisations 
Public law bodies 
Private law bodies with a public service mission 

Total 

3.1.1.  Recovery of STABEX funds 

2016 
 6 

 1 
 5 
 2 

 (0) 
 2 
 0 
 0 
 8 

EUR millions 
2015 
 61 

 3 
 58 
 29 

 14 
 14 
 0 
 1 
 90 

During  2016,  EUR  1  million  was  returned  to  the  EDF  from  double  signature  accounts  in  ACP  countries. 
These revenues are included under revenue from non-exchange transactions (recovery of STABEX funds) 
in the statement of financial performance of the Eighth EDF. 

3.1.2.  Co-financing revenue 

The  co-financing  contributions  received  fulfil  the  criteria  of  revenues  from  non-exchange  transactions 
under  conditions  and  as  such  should  not  affect  the  statement  of  financial  performance.  The  received 
contributions  remain  under  liabilities  (see  note  2.7.2.1)  until  the  conditions  attached  to  the  donated 
funds  are  met,  i.e.  eligible  expenses  are  incurred  (see  note  3.4).  The  corresponding  amount  is  then 
recognised  as  non-exchange  revenue  from  co-financing.  Consequently  the  effect  on  economic  result  of 
the year is nil. 

36 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.2.  REVENUE FROM EXCHANGE TRANSACTIONS 

Financial income 
Other income 
Total 

Eighth 
EDF 
 (0) 
 2 
 2 

Ninth 
EDF 
 2 
 17 
 19 

10th 
EDF 
 2 
 40 
 43 

11th 
EDF 
 (1) 
 3 
 2 

EUR millions 

2016 

2015 

 3 
 62 
 66 

 8 
 42 
 50 

The financial income largely comprises interest on pre-financing that in 2016 amounted to EUR 3 million12 
(2015: EUR 7 million). 

Other income entirely relates to the realised and unrealised foreign exchange gains.  

EXPENSES 

3.3.  AID INSTRUMENTS 

Programmable aid 
Macro-economic support 
Sectoral policy 
Intra ACP projects 
Interest rate subsidies 
Emergency aid 
Other aid programmes 
related to former EDFs 
Institutional support 
Compensation export receipts 
Contributions to Trust Funds 
Total 

Eighth 
EDF 
 1 
– 
 (0) 
– 
 (3) 
– 
– 

– 
 (0) 
– 
 (2) 

Ninth 
EDF 
 (3) 
 39 
 18 
 41 
– 
 (0) 
 1 

– 
 0 
– 
 95 

10th 
EDF 
1 007 
– 
– 
 301 
– 
 98 
– 

 5 
– 
– 
1 411 

11th 
EDF 
 746 
– 
– 
 351 
– 
 300 
– 

 33 
– 
 35 
1 465 

EUR millions 

2015 

1 971 
 51 
 (24) 
 746 
 (6) 
 285 
 0 

 34 
 (3) 
 5 
3 059 

2016 

1 751 
 39 
 18 
 693 
 (3) 
 398 
 1 

 38 
 0 
 35 
2 970 

The  EDF  operating  expenditure  covers  various  aid  instruments  and  takes  different  forms,  depending  on 
how the money is paid out and managed. 

3.4.  CO-FINANCING EXPENSES 

Co-financing 

Eighth 
EDF 
– 

Ninth 
EDF 
– 

10th 
EDF 
 (15) 

11th 
EDF 
– 

EUR millions 

2016 

 (15) 

2015 

 69 

Included  under  this  heading  are  the  expenses  incurred  on  co-financing  projects  in  2016.  It  should  be 
noted  that  the  expenses  incurred  include  estimated  amounts  related  to  the  cut-off  exercise  (and 
consequently reversals of the estimated amounts related to last year). Because the reversals of the 2015 
estimated  expenses  (EUR  50  million)  exceed  the  expenses  incurred  in  2016  (EUR  35  million),  the 
co-financing expenses are negative for 2016. Corresponding negative revenue has been recognised in the 
statement of financial performance (see note 3.1.2). 

12 Recognised in accordance with the provisions of Article 9(2)(d) of the Financial Regulation applicable to the 11th EDF. 

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
                                                 
 
Annual accounts of the European Development Fund 2016 

3.5.  AID INSTRUMENTS AND CO-FINANCING EXPENSES BY 

MANAGEMENT TYPE 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
Trust Funds 
EU delegations 

Indirect Management 
Implemented by : 

EIB and EIF 
International organisations 
Private law bodies with a public service mission 
Public law bodies 
Third countries 
Private law bodies implementing Public Private 
Partnership 

2016 
1 173 

 140 
 10 
 36 
 987 
1 781 

 5 
 821 
 143 
 57 
 756 
 (1) 

EUR millions 
2015 
1 106 

 99 
 2 
 5 
1 000 
2 023 

 31 
 990 
 31 
 70 
 900 
 1 

Total 

2 954 

3 128 

3.6.  FINANCE COSTS 

Write-down of receivables 
Other financial expenses 
Total 

Eighth 
EDF 
 0 
– 
 0 

Ninth 
EDF 
 0 
– 
 0 

10th 
EDF 
 (4) 
– 
 (4) 

11th 
EDF 
– 
 0 
 0 

2016 

 (4) 
 0 
 (4) 

EUR millions 
2015 

 1 
 0 
 1 

The  heading  write-down  of  receivables  comprises  closure  estimate  of  expenses  on  irrecoverable 
receivables  and  also  includes  reversals  of  the  estimated  amounts  related  to  last  year.  Because  the 
reversals of the 2015 amounts (EUR 29 million) exceed the amounts estimated in 2016 (EUR 25 million), 
the overall expenses related to write-down of receivables are negative for 2016. 

3.7.  OTHER EXPENSES 

Administrative and IT 
expenses 
Provision for risks and 
charges 
Realised losses on trade 
debtors 
Exchange loses 
Total 

Eighth 
EDF 
– 

– 

 0 

 3 
 3 

Ninth 
EDF 
 (0) 

– 

 0 

 19 
 19 

10th 
EDF 
 4 

– 

 0 

 42 
 46 

11th 
EDF 
 126 

– 

– 

2016 

EUR millions 
2015 

 129 

 113 

– 

 0 

 4 

 2 

 44 
 162 

 3 
 129 

 66 
 196 

This heading includes support expenditure, i.e. the administrative costs related to the programming and 
implementation  of  the  EDFs.  This  includes  expenses  for  preparation,  follow-up,  monitoring,  and 
evaluation  of  projects  as  well  as  expenses  for  computer  networks,  technical  assistance  etc.

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

4. 

CONTINGENT  ASSETS  &  LIABILITIES  AND 
OTHER SIGNIFICANT DISCLOSURES 

4.1. 

 CONTINGENT ASSETS 

Eighth EDF  Ninth EDF 

10th EDF 

11th EDF  31.12.2016  31.12.2015 

EUR millions 

Performance 
guarantees 
Retention guarantees 
Total 

 (0) 

– 
 (0) 

 4 

 4 
 7 

 5 

 3 
 8 

 0 

– 
 0 

 9 

 7 
 16 

 13 

 6 
 20 

Performance guarantees are requested to ensure that beneficiaries of EDF funding meet the obligations of 
their contracts with the EDF. 

Retention  guarantees  concern  only  works  contracts.  Typically  10 %  of  the  interim  payments  to 
beneficiaries are withheld to ensure that the contractor fulfils their obligations. These withheld amounts 
are  reflected  as  amounts  payable.  Subject  to  the  approval  of  the  contracting  authority,  the  contractor 
may  instead  submit  a  retention  guarantee  which  replaces  the  amounts  withheld  on  interim  payments. 
These received guarantees are disclosed as contingent assets. 

In case of contracts managed under the indirect mode, the guarantees belong to a contracting authority 
other than the EDF and they are not recorded by the EDF. 

4.2.  OTHER SIGNIFICANT DISCLOSURES 

4.2.1.  Outstanding commitments not yet expensed 

The  amount  disclosed  below  is  the  budgetary  RAL  ('Reste  à  Liquider')  less  related  amounts  that  have 
been  included  as  expenses  in  the  statement  of  financial  performance.  The  budgetary  RAL  is  an  amount 
representing  the  open  commitments  for  which  payments  and/or  de-commitments  have  not  yet  been 
made. This is the normal consequence of the existence of multi-annual programmes. 

Eighth EDF  Ninth EDF 

10th EDF 

11th EDF  31.12.2016  31.12.2015 

EUR millions 

Outstanding 
commitments not yet 
expensed 
Total 

 2 

 2 

 202 

2 406 

4 136 

6 746 

5 821 

 202 

2 406 

4 136 

6 746 

5 821 

At 31 December 2016 the budgetary RAL totalled EUR 7 665 million (2015: EUR 6 809 million). 

4.2.2.  Centre for the Development of Enterprise 

The  ACP-EU  Council  of  Ministers  agreed  in  June  2014  "to  proceed  with  the  orderly  closing  of  the  CDE", 
and at the same time "to ensure that the private sector support projects implemented by the CDE in ACP 
countries and regions are completed in full". For this purpose, the ACP-EU Council of Ministers granted a 
delegation of powers to the ACP-EU Committee of Ambassadors to take this matter forward with a view 
to adopt the necessary decisions.  

The ACP-EU Committee of Ambassadors authorised, by Decision No 4/2014 of 23/10/2014, the Executive 
Board of the CDE to take, with immediate effect, all appropriate measures to prepare for the closure of 
the  CDE.  As  stipulated  in  article  2  of  that  Decision,  the  Executive  Board  was  instructed  to  contract  a 
Curator to prepare and implement a closure plan. 
The  Curator  submitted  to  the  CDE  Executive  Board  at  the  end  of  June  2015  a  definitive  strategic  plan, 
with  a  budget  and  work-plan,  which  reflected  the  outcome  of  the  social  dialogue.  The  budget  of  the 
definitive  strategic  plan,  approved  by  the  CDE  Executive  Board,  was  the  basis  for  the  Commission's 

39 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

proposal  for  a  Financing  Decision  that  was  adopted  by  the  EC  in  2015  for  a  total  amount  of 
EUR 18.2 million.  Subsequent  to  the  adoption  of  the  above  Financing  Decision,  a  grant  agreement  was 
concluded  in  December  2015  between  the  CDE  and  the  European  Commission  providing  the  necessary 
financing for the realization of CDE's assets and settlement of its liabilities. This grant agreement started 
on  1  January  2016  and  will  last  until  31  December  2017.  The  value  of  the  contract  is  covered  by  the 
outstanding commitments not yet expensed. 

40 

 
 
 
Annual accounts of the European Development Fund 2016 

5. 

FINANCIAL RISK MANAGEMENT 

The following disclosures with regard to the financial risk management of the EDF relate to the treasury 
operations carried out by the Commission on behalf of the EDF in order to implement its resources. 

5.1.  RISK MANAGEMENT POLICIES AND HEDGING 

ACTIVITIES 

The  rules  and  principles  for  the  management  of  the  treasury  operations  are  laid  down  in  the  11th  EDF 
Financial Regulation and in the Internal Agreement. 

As a result of the above regulation, the following main principles apply: 

  The EDF contributions are paid by Member States in special accounts opened with the bank of issue 
of each Member State or the financial institution designated by it. The amounts of the contributions 
shall remain in those special accounts until the payments of EDF need to be made. 

  EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in 

EUR and in other currencies, including less well-known ones. 

  Bank accounts opened by the Commission on behalf of the EDF may not be overdrawn. 

In addition to the special accounts, other bank accounts are opened by the Commission in the name of 
the  EDF,  with  financial  institutions  (central  banks  and  commercial  banks),  for  the  purpose  of  executing 
payments and receiving receipts other than the Member State contributions to the budget. 

Treasury  and  payment  operations  are  highly  automated  and  rely  on  modern  information  systems. 
Specific procedures are applied to guarantee system security and to ensure segregation of duties in line 
with the Financial Regulation, the Commission’s internal control standards, and audit principles. 

A  written  set  of  guidelines  and  procedures  regulate  the  management  of  the  treasury  and  payment 
operations with the objective of limiting operational and financial risk and ensuring an adequate level of 
control. They cover the different areas of operation, and compliance with the guidelines and procedures is 
checked regularly. 

41 

 
 
 
5.2.  CURRENCY RISK 

Annual accounts of the European Development Fund 2016 

Exposure of the EDF to currency risk at year end – net position 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

31.12.2016 

31.12.2015 

EUR millions 

Financial assets 
Receivables and 
recoverables 
Cash and cash equivalents 
Total 
Financial liabilities 
Non-current financial 
liabilities 
Payables 
Total 
Total 

 0 

 2 

 2 

– 

 0 

 0 

 2 

– 

 0 

 0 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 129 

 678 

 807 

 (6) 

 (495) 

 (501) 

 306 

 3 

– 

 3 

– 

 (54) 

 (54) 

 (51) 

 132 

 680 

 812 

 (6) 

 (549) 

 (555) 

 257 

– 

 4 

 4 

 0 

 0 

 0 

 4 

– 

 0 
 0 

– 

– 
– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 171 

 500 

 671 

 (10) 

 (473) 

 (483) 

 188 

 1 

– 

 1 

– 

 (47) 

 (47) 

 (46) 

 171 

 504 

 675 

 (10) 

 (520) 

 (530) 

 145 

All contributions are held in EUR, and other currencies are purchased only when they are needed for the execution of payments. As a result the EDF's treasury 
operations are not exposed to currency risk. 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

5.3.  INTEREST RATE RISK 

The EDF does not borrow money and as a consequence it is not exposed to interest rate risk. 

Interest is accrued on balances it holds on its different banks accounts. The Commission, on behalf of the 
EDF, has therefore put in place measures to ensure that interest earned regularly reflect market interest 
rates as well as their possible fluctuation. 

Contributions to the EDF budget are credited by each Member State to a special account opened with the 
financial institution designed by it. As the remuneration applied to some of these accounts may currently 
be  negative,  cash  management  procedures  are  in  place  to  minimise  balances  kept  on  the  accounts 
concerned. In addition, in accordance with Council Regulation (EU)2016/888, any negative remuneration 
on these accounts is borne by the relevant Member State. 

Overnight  balances  held  on  commercial  bank  accounts  are  remunerated  on  a  daily  basis.  The 
remuneration  of  balances  on  such  accounts  is  based  on  variable  market  rates  to  which  a  contractual 
margin  (positive  or  negative)  is  applied.  For  most  of  the  accounts  the  interest  calculation  is linked  to  a 
market reference rate and is adjusted to reflect any fluctuations of this rate. As a result no risk is taken 
by the EDF that its balances be remunerated at rates lower than market rates. 

5.4.  CREDIT RISK (COUNTERPARTY RISK) 

Financial assets that are neither past due nor impaired: 

Total 

 132 

 132 
 171 

 171 

Neither 
past due 
nor 
impaired 

 93 

 93 
 50 

 50 

EUR millions 

Past due but not impaired 

< 1 year 
 36 

1-5 years 
 4 

> 5 years 
– 

 36 
 120 

 120 

 4 
 1 

 1 

– 
– 

– 

Exchange receivables and non-
exchange recoverables 
Total at 31.12.2016 
Exchange receivables and non-
exchange recoverables 
Total at 31.12.2015 

Financial assets by risk category: 

Counterparties with external credit 
rating 
Prime and high grade 
Upper medium grade 
Lower medium grade 
Non- investment grade 
Total 
Counterparties without external credit 
rating 
Group 1 (debtors without defaults in 
the past) 
Group 2 (debtors with defaults in the 
past) 
Total 
Total 

31.12.2016 

EUR millions 

31.12.2015 

Receivables 

Cash 

Total 

Receivables 

Cash 

Total 

 34 
 3 
 2 
 1 
 40 

 92 

– 

 284 
 371 
 16 
 9 
 680 

 0 

– 

 92 
 132 

 0 
 680 

 318 
 374 
 18 
 10 
 720 

 92 

– 

 92 
 812 

 6 
 34 
 36 
 14 
 90 

 81 

– 

 167 
 16 
 312 
 9 
 503 

 1 

– 

 81 
 171 

 1 
 504 

 173 
 50 
 348 
 23 
 593 
– 

 82 

– 

 82 
 675 

Funds  in  the  categories  non-investment  grade  and  lower  medium  grade  relate  mainly  to  Member  State 
contributions to the EDF paid to the special accounts opened by Member States in accordance with Article 
22(3) of the EDF FR. According to this regulation the amount of such contributions must remain in those 
special accounts until the payments need to be made.  

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

Most of the EDF's treasury resources are kept, in accordance with the EDF FR, in the "special accounts" 
opened by Member States for the payment of their contributions. The majority of such accounts are held 
with Member States' treasuries or national central banks. These institutions carry the lowest counterparty 
risk for the EDF (exposure is with its Member States). 

For the part of the EDF's treasury resources kept with commercial banks in order to cover the execution 
of  payments,  replenishment  of  these  accounts  is  executed  on  a  just-in-time  basis  and  is  automatically 
managed by the Commission treasury's cash management system. Minimum cash levels, proportional to 
the  average  amount  of  daily  payments  made  from  it,  are  kept  on  each  account.  As  a  consequence  the 
amounts  kept  overnight  on  these  accounts  remain  constantly  at  low  levels  which  ensure  the  EDF's  risk 
exposure is limited. 

In  addition,  specific  guidelines  are  applied  for  the  selection  of  commercial  banks  in  order  to  further 
minimise counterparty risk to which the EDF is exposed. 

All commercial banks are selected by call for tenders. The minimum short-term credit rating required for 
admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level 
may be required in specific and duly justified circumstances. 

5.5.  LIQUIDITY RISK 

Maturity analysis of financial liabilities by remaining contractual maturity 

Financial liabilities 
Total at 31.12.2016 
Financial liabilities 
Total at 31.12.2015 

< 1 year 
 549 
 549 
 520 
 520 

1-5 years 
 6 
 6 
 10 
 10 

> 5 years 
– 
– 
– 
– 

EUR millions 
Total 
 555 
 555 
 530 
 530 

Budget  principles  applied  to  the  EDF  ensure  that  overall  cash  resources  for  the  budgetary  period  are 
always sufficient for the execution of all related payments. Indeed the total Member States' contributions 
equal the overall amount of payment appropriations for the relevant budgetary period. 

Member States contributions to EDF, however, are paid in three instalments per year, while payments are 
subject to certain seasonality. 

In order to ensure that treasury resources are always sufficient to cover the payments to be executed in 
any given month, information on the treasury situation is regularly exchanged between the Commission' 
treasury and the relevant spending departments in order to ensure that payments executed in any given 
period do not exceed the available treasury resources. 

In  addition  to  the  above,  in  the  context  of  the  EDF's  daily  treasury  operations,  automated  cash 
management  tools  ensure  that  sufficient  liquidity  is  available  on  each  of  the  EDF's  bank  accounts,  on a 
daily basis. 

44 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

6.  RELATED PARTY DISCLOSURES 

The  related  parties  of  the  EDF  are  the  Bêkou  EU  Trust  Fund  and  the  EUTF  for  Africa.  Transactions 
between these entities take place as part of the normal operations of the EDF and as this is the case, no 
specific  disclosure  requirements  are  necessary  for  these  transactions  in  accordance  with  the  EU 
accounting rules. 

The EDF has no separate management since it is managed by  the Commission. The entitlements of the 
key  management  of  the  EU,  including  the  Commission,  have  been  disclosed  in  the  Consolidated  annual 
accounts of the European Union under heading 7.2 "Key management entitlements". 

7. 

EVENTS AFTER THE BALANCE SHEET DATE 

At  the  date  of  transmission  of  these accounts,  no  material issues  had  come  to  the  attention  of  or were 
reported to the Accounting Officer  of the EDF that would require separate disclosure under this section. 
The annual accounts and related notes were prepared using the most recently available information and 
this is reflected in the information presented above. 

8.  RECONCILIATION  OF  ECONOMIC  RESULT  AND 

BUDGET RESULT 

The  economic  result  of  the  year  is  calculated  on  the  basis  of  accrual  accounting  principles.  The  budget 
result  is  however  based  on  cash  accounting  rules.  As  the  economic  result  and  the  budget  result  both 
cover  the  same  underlying  operational  transactions,  it  is  a  useful  control  to  ensure  that  they  are 
reconcilable.  The  table  below  shows  this  reconciliation,  highlighting  the  key  reconciling  amounts,  split 
between revenue and expenditure items. 

ECONOMIC RESULT OF THE YEAR 

Revenue 
Entitlements not affecting the budget result 
Entitlements established in current year but not yet 
collected 
Entitlements established in previous years and collected in 
current year 
Net effect of pre-financing 
Accrued revenue (net) 
Expenses 
Expenses of the current year not yet paid 
Expenses of previous years paid in the current year 
Payments cancellation 
Net effect of pre-financing 
Accrued expenses (net) 

2016 
(3 073) 

EUR millions 
2015 
(3 152) 

 (2) 
 (7) 

 16 

 43 
 8 

 63 
 (129) 
 22 
 (459) 
 168 

 (1) 
 (11) 

 19 

 28 
 29 

 61 
 (221) 
 12 
 (53) 
 200 

BUDGET RESULT OF THE YEAR  

(3 350) 

(3 088) 

8.1.  RECONCILING ITEMS - REVENUE 

The  budgetary  revenue  of  a  financial  year  corresponds  to  the  revenue  collected  from  entitlements 
established  in  the  course  of  the  year  and  amounts  collected  from  entitlements  established  in  previous 
years. 

The  entitlements  not  affecting  the  budget  result  are  recorded  in  the  economic  result  but  from  a 
budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves 
and cannot be recommitted without a Council decision. 

The  entitlements  established  in  the  current  year  but  not  yet  collected  are  to  be  deducted  from  the 
economic  result  for  reconciliation  purposes  as  they  do  not  form  part  of  budgetary  revenue.  On  the 

45 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

contrary, the entitlements established in previous years and collected in the current year must be added 
to the economic result for reconciliation purposes. 

The  net  effect  of  pre-financing  is  the  clearing  of  the  recovered  pre-financing  amounts.  This  is  a  cash 
receipt which has no impact on the economic result. 

The  net  accrued  revenue  mainly  consists  of  accruals  made  for  year-end  cut-off  purposes.  Only  the  net 
effect, i.e. the accrued revenue of the current year less the reversal  of accrued revenue of the previous 
year, is taken into consideration. 

8.2.  RECONCILING ITEMS – EXPENDITURE 

Expenses  of  the  current  year  not  yet  paid  are  to  be  added  for  reconciliation  purposes  as  they  are 
included  in  the  economic  result  but  do  not  form  part  of  budgetary  expenditure.  On  the  contrary,  the 
expenses of previous years paid in the current year must be deducted from the economic result for 
reconciliation purposes  as they are part of  the current year's  budgetary  expenditure but have either no 
effect on the economic result or they decrease the expenses in case of corrections. 

The cash receipts from payment cancellations do not affect the economic result whereas they impact 
the budget result. 

The  net  effect  of  pre-financing  is  the  combination  of  the  new  pre-financing  amounts  paid  in  the 
current year (recognised as budgetary expenditure of the year) and the clearing of pre-financing paid in 
the  current  year  or  previous  years  through  the  acceptance  of  eligible  costs.  The  latter  represents  an 
expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing 
had already been considered as a budgetary expenditure at the time of its payment. 

The net accrued expenses mainly consist of accruals made for year-end  cut-off purposes, i.e. eligible 
expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. 
the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is 
taken into consideration. 

46 

 
 
Annual accounts of the European Development Fund 2016 

FINANCIAL STATEMENTS OF THE EU 
TRUST FUNDS CONSOLIDATED IN EDF 

It should be noted that due to the rounding of figures into thousands of euros, some financial data in the 
tables may appear not to add-up. 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

FINAL ANNUAL ACCOUNTS OF THE BÊKOU 
EU TRUST FUND 

It should be noted that due to the rounding of figures into thousands of euros, some financial data in the 
tables may appear not to add-up. 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST 
FUND 

General background on Union Trust Funds 

A  trust  fund  is  a  legal  arrangement  with  a  distinct  financial  structure  that  pools  the  funds  of  several 
donors to jointly finance an action on the basis of commonly agreed objectives and reporting formats. 

In  accordance  with  Article  187(1)  of  the  Financial  Regulation  applicable  to  the  general  budget  of  the 
Union  (EU  FR)  and  Article  42  of  the  Financial  Regulation  applicable  to  the  11th  European  Development 
Fund  (EDF  FR),  the  Commission  is  authorised  to  create  Union  Trust  Funds  for  external  actions  (EUTF). 
The EUTFs are created under an agreement concluded with other donors to respond to emergency, post-
emergency or thematic actions. The establishment of an EUTF needs to be justified namely by EU added 
value (its objectives can be better met at EU than at national level), and complementarity (the trust fund 
should not duplicate already existing and similar instruments). 

EUTFs are created for a limited duration, which is, together with its objectives, defined by the constitutive 
act  of  each  trust  fund.  In  accordance  with  Article  187  of  the  EU  FR,  the  EUTF  has  specific  governance 
arrangements  and  contributions  are  placed  outside  the  EU  budget.  Each  EUTF  has  a  governing  board 
('trust  fund  board')  chaired  by  the  Commission  with  representation  of  the  donors  and  the  non-
contributing Member States as observers.  

The  Operational  Board  that  is  composed  of  the  EU  representative  (the  'Chair'),  founding  Members 
('Deputy  Chairs')  and  representatives  of  other  donors,  who  contributed  at  least  EUR  3  million 
('Members'),  decides  upon  the  use  of  the  funds  of  the  EUTF  and  assesses  the  effectiveness  of  the 
activities  financed  by  the  EUTF.  On  the  administrative  level  the  Operational  Board  is  amongst  others 
responsible for approval of the annual report, audited annual accounts, assessing the effectiveness of the 
internal control systems, follow up of observations by internal and external auditors, etc. 

EUTFs are managed  by  the Commission under  the  responsibility  of  the authorising  officer  by  delegation 
who  provides  assurance  on  the  use  of  the  funds  to  the  Commission  and  to  third  donors.  The  EUTF 
manager is the authorising officer by sub-delegation. As is the case for the European Development Fund, 
the accounting officer of a EUTF is the accounting officer of the Commission, who is responsible for laying 
down accounting procedures and chart of accounts common to all EUTFs.  

The Bêkou Trust Fund 

The  first  multi-donor  EU  Trust  Fund  called  Bêkou,  which  means  'hope'  in  Sango,  was  established  on 
15 July 2014, by the EU Commission (represented by DGs DEVCO and ECHO, and the EEAS) and three of 
its  Member  States  (Germany,  France  and  the  Netherlands),  with  the  aim  of  promoting  the  stabilisation 
and reconstruction of the Central African Republic (CAR). It has been established for a maximum duration 
of 60 months. The trust fund is managed from Brussels. 

Annual accounts of the Bêkou Trust Fund 

According  to  Article  8  of  the  Agreement  establishing  the  European  Union  Trust  Fund  for  the  Central 
African Republic, the 'Bêkou EU Trust Fund' and article 11.2.1 of the Constitutive agreement, the annual 
accounts comprise two parts: (1) The annual financial report prepared by the EUTF manager and (2) The 
annual financial statements prepared by the EC Accounting Officer, who is, based on the same article also 
the Accounting Officer of the trust fund. 

According  to  Article  8  of  the  Constitutive  agreement  the  financial  statements  shall  be  prepared  in 
accordance  with  the  accounting  rules  adopted  by  the  Commission's  Accounting  Officer  (EU  Accounting 
Rules, EAR) that are based on the International Public Sector Accounting Standards (IPSAS).  

The  annual  accounts  are  subject  to  independent  external  audit  and  the  final  annual  accounts  are 
submitted  by  the  EUTF  manager  and  the  Accounting  Officer  to  the  operational  board  for  approval 
(Article 8.3.4(c)). 

Highlights of the year 

At  the  end  of  2016,  7  donors  contributed  to  the  Bêkou  Trust  Fund:  the  European  Development  Fund 
(EDF), the EU Budget, 4 Member States (MS) and 1 non-Member State. 

49 

 
 
Annual accounts of the European Development Fund 2016 

The  Trust  Fund  will  finance  activities  that  contribute  to  assisting  the  Central  African  Republic  in  its 
recovery from crisis and in all aspects of reconstruction, with the emphasis on measures designed to: 

  Restore essential public services (e.g. electricity, transport, access to justice and access to water) 
and basic social services (health and education), and stabilise the food and nutrition situation; 

  Revive economic activity; 
  Stabilise  the  country  and  restore  the  social  fabric,  in  particular  through  reconciliation,  peaceful 

coexistence between the communities of CAR and respect for human rights; 

  Re-establish  the  legitimacy,  rebuild  capacity  and  restore  the  operation  of  national  and  local 

administrative structures. 

It will also finance activities that contribute to mitigating the impact of the crisis on the countries sharing 
a common border with CAR and/or sheltering refugees and those fleeing the violence in CAR. 

At  the  end  of  2016  the  total  contribution  pledged  to  the  EUTF  amounted  to  approximately  EUR  173 
million:  EDF  with  EUR  68  million,  EU  Budget  with  EUR  50  million  while  MS  and  other  donors  have 
announced pledges of EUR 55 million.  

In  total,  11  programmes  had  been  adopted  for  the  recovery  of  the  country.  Up  to  the  end  of  2016  an 
amount of EUR 91.3 million in the areas of health, food and nutrition security, infrastructure, integration 
of  women  in  the  society  as  well  as  aid  to  central  african  refugies  in  surrounding  countries  had  been 
committed. 

50 

 
 
Annual accounts of the European Development Fund 2016 

BALANCE SHEET OF THE BÊKOU EU TRUST FUND 

NON-CURRENT ASSETS 
Pre-financing 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Accumulated surplus 
Economic result of the year 
NET ASSETS 

31.12.2016 

31.12.2015 

 EUR '000 

 3 604 

 3 604 

 12 458 
 1 455 
 43 036 

 56 949 

 60 554 

 3 446 

 3 446 

 6 047 
 1 364 
 52 461 

 59 873 

 63 319 

 (59 339) 

 (59 339) 

 (63 125) 

 (63 125) 

 (1 215) 

 (1 215) 

  (193) 

  (193) 

 (60 554) 

 (63 319) 

  - 

– 
– 
– 

– 

– 
– 
– 

51 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF FINANCIAL PERFORMANCE OF THE BÊKOU 
EU TRUST FUND 

REVENUE 
Revenue from non-exchange transactions 
Revenue from donations 

Revenue from exchange transactions 
Financial income 

Total Revenue 

EXPENSES 
Operating expenses 
Other expenses 

Total Expenses 
ECONOMIC RESULT OF THE YEAR 

2016 

 17 232 
 17 232 

  48 
  48 

 17 280 

 (16 432) 
  (848) 

 (17 280) 
– 

EUR '000 

2015 

 9 354 
 9 354 

  101 
  101 

 9 455 

 (8 824) 
  (631) 

 (9 455) 
– 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CASHFLOW STATEMENT OF THE BÊKOU EU TRUST FUND 

Economic result of the year 
Operating activities 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in accrued charges and deferred 
income 

NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2016 
– 

(6 569) 
 (91) 

(3 786) 
1 021 

(9 425) 

(9 425) 
 52 461 
 43 036 

EUR '000 
2015 
– 

(9 493) 
(1 364) 

18 125 
 193 

7 461 

7 461 
 45 000 
 52 461 

53 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF CHANGES IN NET ASSETS OF THE BÊKOU EU 
TRUST FUND 

BALANCE AS AT 31.12.2015 
Economic result of the year 
BALANCE AS AT 31.12.2016 

Accumulated surplus/ 
(deficit) 
– 
– 
– 

Economic result of 
the year 
– 
– 
– 

EUR '000 

Net assets 

– 
– 
– 

54 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

FINAL ANNUAL ACCOUNTS OF THE EUTF 
FOR AFRICA 

It should be noted that due to the rounding of figures into thousands of euros, some financial data in the 
tables may appear not to add-up. 

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

BACKGROUND INFORMATION ON THE EUTF FOR AFRICA 

General background on Union Trust Funds 

A  trust  fund  is  a  legal  arrangement  with  a  distinct  financial  structure  that  pools  the  funds  of  several 
donors to jointly finance an action on the basis of commonly agreed objectives and reporting formats. 

In  accordance  with  Article  187(1)  of  the  Financial  Regulation  applicable  to  the  general  budget  of  the 
Union  (EU  FR)  and  Article  42  of  the  Financial  Regulation  applicable  to  the  11th  European  Development 
Fund  (EDF  FR),  the  Commission  is  authorised  to  create  Union  Trust  Funds  for  external  actions  (EUTF). 
The  EUTFs  are  created  under  an  agreement  concluded  with  other  donors  to  respond  to  emergency, 
post emergency  or  thematic  actions.  The  establishment  of  an  EUTF  needs  to  be  justified  namely  by  EU 
added  value  (its  objectives  can  be  better  met  at  EU  than  at  national  level),  and  complementarity  (the 
trust fund should not duplicate already existing and similar instruments). 

EUTFs offer  a number of  advantages:  they are  EU  led  instruments,  offering better  coordination  with EU 
Member  States;  better  control  of  operations  by  the  Union  and  other  donors  and  enhanced  EU  visibility. 
The EUTFs benefit from fast decision-making processes and from their capacity to pool larger sums from 
different sources making them a flexible, proactive and adaptable tool. 

EUTFs are created for a limited duration, which is, together with its objectives, defined by the constitutive 
act  of  each  trust  fund.  In  accordance  with  Article  187  of  the  EU  FR,  the  EUTF  has  specific  governance 
arrangements  and  contributions  are  placed  outside  the  EU  budget.  Each  EUTF  has  a  governing  board 
('trust  fund  board')  chaired  by  the  Commission  with  representation  of  the  donors  and  the  non-
contributing Member States as observers. The trust fund board decides upon the use of the funds of the 
EUTF.  

The  work  plan  of  the  EUTF  is  approved  by  the  Operational  Board  that  is  composed  of  the  EU 
representative  (the  'Chair'),  founding  Members  ('Deputy  Chairs')  and  representatives  of  other  donors, 
who contributed at least EUR 3 million ('Members') who also assesses the effectiveness of the activities 
financed by the EUTF. On the administrative level the Operational Board is amongst others resonsible for 
approval of the annual report, audited annual accounts, assessing the effectiveness of the internal control 
systems, follow up of observations by internal and external auditors, etc. 

EUTFs are managed  by  the Commission under  the  responsibility  of  the authorising officer by  delegation 
who  provides  assurance  on  the  use  of  the  funds  to  the  Commission  and  to  third  donors.  The  EUTF 
manager is the authorising officer by sub-delegation. As is the case for the European Development Fund, 
the accounting officer of a EUTF is the accounting officer of the Commission, who is responsible for laying 
down accounting procedures and chart of accounts common to all EUTFs.  

The EUTF for Africa 

European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and 
displaced  persons  in  Africa  ('EUTF  for  Africa')  was  launched  on  12  November  2015  during  the  Valletta 
Summit  on  Migration.  The  main  objectives  of  this  trust  fund  is  to  support  all  aspects  of  stability  and 
contribute  to  better  migration  management  as  well  as  addressing  the  root  causes  of  destabilisation, 
forced  displacement  and  irregular  migration,  in  particular  by  promoting  resilience,  economic  and  equal 
opportunities, security and development and addressing human rights abuses.  

The  trust  fund  operates  in  three  main  geographic  areas,  namely  the  Sahel  region  and  Lake  Chad  area, 
the  Horn  of  Africa  and  the  North  of  Africa  but  also  the  neighbouring  countries  of  the  eligible  countries 
may benefit, on a case by case basis, from the Trust fund's project. The Trust Fund is established for a 
limited  period,  until  31  December  2020  in  order  to  provide  a  short  and  medium-term  response  to  the 
challenges of the regions. The trust fund is managed from Brussels. 

Annual accounts of the EUTF for Africa 

According  to  Article  7  of  '  The  agreement  establishing  the  European  Union  emergency  trust  fund  for 
stability and addressing root causes of irregular migration and displaced persons in Africa and its internal 
rules' ('Constitutive agreement') the annual accounts comprise two parts: (1) The annual financial report 
prepared by the EUTF manager and (2) The annual financial statements prepared by the EC Accounting 
Officer, who is, based on the same article also the Accounting Officer of the trust fund. 

56 

 
 
Annual accounts of the European Development Fund 2016 

According  to  Article  8  of  the  Constitutive  agreement  the  financial  statements  shall  be  prepared  in 
accordance  with  the  accounting  rules  adopted  by  the  Commission's  Accounting  Officer  (EU  Accounting 
Rules, EAR) that are based on the International Public Sector Accounting Standards (IPSAS).  

The  annual  accounts  are  subject  to  independent  external  audit  and  the  final  annual  accounts  are 
submitted  by  the  EUTF  manager  and  the  Accounting  Officer  to  the  operational  board  for  approval 
(Article 8.3.4(c)). 

The 2016 is  the first year in  which the financial statements of  the EUTF for  Africa are issued.  This is in 
accordance with Article 8.3.2 following which the obligation of the accounting officer to prepare financial 
statements  only  applies  in  respect  of  that  first  financial  year  if  the  trust  fund  existed  for  more  than  six 
months. The transactions of 2015 are reflected in the comparative figures. 

Highlights of the year 

At  the  end  of  2016  the  total  pledged  resources  amounted  to  EUR  2  555  million.  Total  external 
contributions amounted to EUR 152 million and the contributions from the EU and EDF budgets amounted 
to EUR 2 403 million.  

In  just  a  year,  a  total  of  106  projects  worth  EUR  1.589  million  have  been  approved  for  the  Sahel/Lake 
Chad,  the  Horn  of  Africa  and  the  North  of  Africa  regions.  The  projects  can  be  split  by  a  geographical 
window as follows: 65 programs in the Sahel/Lake Chad region for a total amount of EUR 918.5 million; 
35 programs in  the Horn of  Africa region  for  a total amount of EUR  606 million, and 6 programs in  the 
North  of  Africa  region  for  a  total  amount  of  EUR  64.5  million.  The  projects  cover  the  following  priority 
areas:  development  benefits  of  migration  (EUR  942  million);  legal  migration  and  mobility  (EUR  68 
million);  protection  and  asylum  (EUR  233  million);  prevention  of  and  fight  against  irregular  migration; 
migrant  smuggling  and  trafficking  in  human  beings  (EUR  170  million);  return,  readmission  and 
reintegration  (EUR  163  million)  and  other  (EUR  13  million).  Out  of  the  approved  amount  EUR  1  488 
million  has  been  committed  and  EUR  600  million  has  been  contracted  to  implementing  partners.

57 

 
 
Annual accounts of the European Development Fund 2016 

BALANCE SHEET OF THE EUTF FOR AFRICA 

NON-CURRENT ASSETS 
Pre-financing 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred income 

31.12.2016 

31.12.2015 

 EUR '000 

 44 854 

 44 854 

 70 731 
 9 476 
 14 879 

 95 086 

 139 941 

– 

– 

– 
– 
 32 642 

 32 642 

 32 642 

 (138 502) 

 (138 502) 

 (32 642) 

 (32 642) 

  (702) 
  (736) 

 (1 439) 

– 
– 

– 

TOTAL LIABILITIES 

 (139 941) 

 (32 642) 

NET ASSETS 

FUNDS & RESERVES 
Accumulated surplus 
Economic result of the year 
NET ASSETS 

– 

– 
– 
– 

– 

– 
– 
– 

58 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF FINANCIAL PERFORMANCE OF THE EUTF FOR 
AFRICA 

REVENUE 
Revenue from non-exchange transactions 
Revenue from donations 

Revenue from exchange transactions 
Financial income 
Other exchange revenue 

Total revenue 

EXPENSES 
Operating expenses 
Other expenses 
Total expenses 

ECONOMIC RESULT OF THE YEAR 

2016 

 52 246 
 52 246 

  54 
  43 
  97 

 52 343 

 (49 042) 
 (3 301) 
 (52 343) 

– 

EUR '000 

2015 

– 
– 

– 
– 
– 

– 

– 
– 
– 

– 

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CASHFLOW STATEMENT OF THE EUTF FOR AFRICA 

Economic result of the year 
Operating activities 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred 
income 

NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2016 
– 

(115 585) 
(9 476) 

105 860 
 702 
 736 

(17 763) 

(17 763) 
 32 642 
 14 879 

EUR '000 
2015 
– 

– 
– 

32 642 
– 
– 

32 642 

32 642 
– 
 32 642 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF CHANGES IN NET ASSETS OF THE EUTF 
FOR AFRICA 

BALANCE AS AT 31.12.2015 
Economic result of the year 
BALANCE AS AT 31.12.2016 

Accumulated surplus/ 
(deficit) 
– 
– 
– 

Economic result of 
the year 
– 
– 
– 

EUR '000 

Net assets 

– 
– 
– 

61 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONSOLIDATED FINANCIAL STATEMENTS 
OF THE EDF AND THE EU TRUST FUNDS 

It should be noted that due to the rounding of figures into millions of euros, some financial data in the 
tables may appear not to add-up. 

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONSOLIDATED BALANCE SHEET 

31.12.2016 

 EUR millions 
31.12.2015 

NON-CURRENT ASSETS 
Pre-financing 
Trust Fund contributions 
Exchange receivables and non-exchange recoverables 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Called fund capital transfers between active EDFs 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

457 
 – 
 – 
457 

 1 455 
 143 
 738 
2 336 
2 794 

 (4) 
 (106) 
 (110) 

 (549) 
 (778) 
(1 327) 
(1 437) 

1 357 

42 323 
2 252 
– 
(40 146) 
(3 073) 
1 357 

 520 
– 
– 
 520 

1 151 
 172 
 589 
1 912 
2 432 

 (4) 
 (72) 
 (76) 

 (520) 
 (855) 
(1 376) 
(1 451) 

 980 

38 873 
2 252 
– 
(36 994) 
(3 152) 
 980 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE 

REVENUE 
Revenue from non-exchange transactions 
Recovery of expenses 
Revenue from trust funds donations 

Revenue from exchange transactions 
Financial income 
Other income 

Total Revenue 
EXPENSES 
Aid instruments 
Co-financing expenses 
Finance costs 
Expenses implemented by trust funds 
Other expenses 
Total Expenses 

2016 

 8 
 35 
 43 

 4 
 62 
 66 
 108 

(2 935) 
 15 
 4 
 (65) 
 (200) 
(3 181) 

EUR millions 
2015 

 90 
 4 
 94 

 8 
 42 
 50 
 144 

(3 059) 
 (69) 
 (1) 
 (4) 
 (163) 
(3 296) 

ECONOMIC RESULT OF THE YEAR 

(3 073) 

(3 152) 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

CONSOLIDATED CASH FLOW STATEMENT 

Economic result of the year 
Operating activities 
Capital increase - contributions 
(Increase)/decrease in trust funds contributions 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
Increase/(decrease) in provisions 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred 
income 

NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2016 
 (3 073) 

EUR millions 
2015 
 (3 152) 

3 450 
 (0) 
 (242) 
 29 

– 
 34 
 29 
 (78) 

 149 

 149 
  589 
  738 

3 200 
 39 
 204 
  (43) 

 4 
 (7) 
 (179) 
  132 

 198 

 198 
  391 
  589 

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2016 

Fund capital 
- active EDFs 
(A) 

Uncalled 
funds - 
active EDFs 
(B) 

BALANCE AS AT 31.12.2014 
Capital increase -  contributions 
Capital decrease - funds committed 
under the Bridging Facility 
Recognition of the 11th EDF capital 
Economic result of the year 
BALANCE AS AT 31.12.2015 
Capital increase - contributions 
Economic result of the year 
BALANCE AS AT 31.12.2016 

45 691 

(1 595) 

29 367 
– 
73 464 

10 018 
(4 795) 

29 367 
– 
34 590 
(3 450) 

73 464 

31 140 

Called fund 
capital - 
active EDFs 
(C) = (A)-
(B) 
35 673 
4 795 
(1 595) 

– 
– 
38 874 
3 450 
– 
42 323 

Cumulative 
Reserves (D) 

(36 994) 
– 

(3 152) 
(40 146) 

(3 073) 
(43 219) 

Called fund 
capital from 
closed EDFs 
carried forward 
(E) 
2 252 
– 

– 
2 252 

2 252 

EUR millions 
Total Net Assets 
(C)+(D)+(E) 

 932 
4 795 
(1 595) 

– 
(3 152) 
 980 
3 450 
(3 073) 
1 357 

66 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

EDF REPORT ON FINANCIAL 
IMPLEMENTATION 

67 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

REPORT ON FINANCIAL IMPLEMENTATION - 2016 

INTRODUCTORY NOTE 
Previous EDFs 

  As the Sixth EDF was closed in 2006 and the Seventh EDF was closed in 2008, the annual accounts 
no  longer  contain  implementation  tables  for  these  EDFs.  However,  implementation  of  the 
transferred balances can be found in the Ninth EDF. 

  As  in  past  years,  to  ensure  transparency  in  the  presentation  of  the  accounts  for  2016,  the  tables 
set out separately for the Eighth EDF the part used for Lomé Convention programming and the part 
used for programming under the Cotonou Agreement. 

  In  accordance  with  Article  1(2)(b)  of  the  Internal  Agreement  of  the  Ninth  EDF,  balances  and 
decommitments  of  previous  EDFs  have  been  transferred  to  the  Ninth  EDF,  and,  during  the  life  ot 
the Ninth EDF, have been committed as Ninth EDF funds. 

10th EDF 

The  ACP-EC  Partnership  Agreement  signed  on  23  June  2000  in  Cotonou  by  the  Member  States  of  the 
European  Community  and  the  States  of  Africa,  the  Caribbean  and  the  Pacific  (ACP  States)  entered  into 
force  on  1  April  2003.  The  Cotonou  Agreement  was  amended  twice,  firstly  by  the  agreement  signed  in 
Luxembourg on 25 June 2005, secondly by the agreement signed in Ouagadougou on 22 june 2010. 

The  EU  Council  Decision  of  27  November  2001  (2001/822/EC)  on  the  association  of  the  overseas 
countries  and  territories  (OCT)  with  the  European  Union  entered  into  force  on  2  December  2001.  This 
Decision was amended on 19 March 2007 (Decision 2007/249/EC). 

The Internal Agreement on the financing of Community aid under the multiannual financial framework for 
the  period  2008-2013  in  accordance  with  the  revised  Cotonou  Agreement,  adopted  by  the 
Representatives of the Governments of the Member States of the European Community on 17 July 2006, 
entered into force on 1 July 2008. 

Under the Cotonou Agreement, the second period (2008-2013) of Community aid to the ACP States and 
OCTs is funded by the 10th EDF for an amount of EUR 22 682 million, of which: 

  EUR  21  966  million  is  allocated  to  the  ACP  countries  in  accordance  with  the  multiannual  financial 
framework set out in Annex Ib to the revised Cotonou Agreement, of which EUR 20 466 million is 
managed by the European Commission; 

  EUR  286  million  is  allocated  to  the  OCTs  in  accordance  with  Annex  IIAa  of  the  revised  Council 
Decision  on  the  association  of  the  OCTs  with  the  European  Community,  of  which  256  million  is 
managed by the European Commission; 

  EUR  430  million  is  for  the  Commission  to  finance  the  costs  arising  from  the  programming  and 
implementation of 10th EDF resources, in accordance with Article 6 of the Internal Agreement. 

According  to  the  "Sunset  clause"  of  the  10th  EDF,  (Articles  1(4)  and  1(5)  of  the  10th  EDF  Internal 
Agreement) no funds could be committed after 31 December 2013. Uncommitted funds were transferred 
to the 11th EDF performance reserve.  

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Annual accounts of the European Development Fund 2016 

11th EDF 

The  ACP-EC  Partnership  Agreement  signed  on  23  June  2000  in  Cotonou  by  the  Member  States  of  the 
European  Community  and  the  States  of  Africa,  the  Caribbean  and  the  Pacific  (ACP  States)  entered  into 
force  on  1  April  2003.  The  Cotonou  Agreement  was  amended  twice,  firstly  by  the  agreement  signed  in 
Luxembourg on 25 June 2005, secondly by the agreement signed in Ouagadougou on 22 june 2010. 

The  EU  Council  Decision  of  27  November  2001  (2001/822/EC)  on  the  association  of  the  overseas 
countries  and  territories  (OCT)  with  the  European  Union  entered  into  force  on  2  December  2001.  This 
Decision was amended on 19 March 2007 (Decision 2007/249/EC). 

The Internal Agreement on the financing of Community aid under the multiannual financial framework for 
the  period  2014-2020  in  accordance  with  the  revised  Cotonou  Agreement,  adopted  by  the 
Representatives of the Governments of the Member States of the European Community on August 2013, 
entered into force on March 2015. 

Under  the  Cotonou  Agreement,  the  third  period  (2014-2020)  of  Community  aid  to  the  ACP  States  and 
OCTs is funded by the 11th EDF for an amount of EUR 30 506 million, of which: 

  EUR 29 089 million is allocated to the ACP countries in accordance with Article 1(2)(a) and Article 
2(d)  of  the  Internal  Agreement,  of  which  EUR  27  955  million  is  managed  by  the  European 
Commission; 

  EUR 364.5 million is allocated to the OCTs in accordance with Article 1(2)(a) and Article 3(1) of the 

Internal Agreement, of which 359.5 million is managed by the European Commission; 

  EUR 1 052.5 million is for the Commission to finance the costs arising from the programming and 
implementation  of  11th  EDF  resources,  in  accordance  with  Article  1(2)(a)  of  the  Internal 
Agreement. 

- Remaining funds on non-mobilisable performance reserves at 31/12/2016 

The  amounts  decommitted  from  projects  under  the  Ninth  and  previous  EDFs  are  transferred  to  the 
performance reserve of the 10th EDF, with the exception of Stabex funds. 

The decommited funds from projects under the 10th EDF are transferred to the performance reserve of 
the 11th EDF. 

During 2016, all decommitted funds from previous EDFs were transferred to the respective reserves.  

In accordance with article 1(4) of the 11th EDF Internal Agreement and the Council Decision of 2 August 
2016 (2016/1337), an amount of decommitted funds from the 10th EDF was transferred for the purpose 
of replenishing the African Peace Facility for the period 2016-2018 up to a maximum of EUR 491 million 
and up to EUR 16 million for support of expenditure.  

Total available on non-mobilisable performance reserves at 31/12/2015 

Total made available on non-mobilisable performance reserves during 2016 

Less amount transferred for replenishing the African Peace Facility at 
31/12/2016 

Balance of non-mobilisable reserve (from decommitted funds under the 
Eighth, Ninth and 10th EDF) at 31/12/2016  

EUR millions 
151 

534 

(386) 

299 

- 11th EDF Stabex reserve 
Following  the  closure  of  Stabex  accounts,  unused/decommitted  funds  are  transferred  to  the  11th  EDF 
Stabex  A  Envelope reserve (10th  EDF Internal Agreement  Art.  1(4)) and then to the national indicative 
programmes of the countries concerned. 

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Annual accounts of the European Development Fund 2016 

- EDF Co-financings 
Under  the  10th  and  11th  EDF,  transfer  agreements  for  co-financings  from  Member  States  were  signed, 
and  commitment  appropriations  were  opened  for  a  total  amount  of  EUR  209  million,  while  payment 
appropriations were opened for the cashed amounts totalling EUR 190 million.  
The situation of co-financing appropriations at 31/12/2016 is shown in the table below :  

Commitments appropriations  Payment appropriations 

EUR millions 

Co-financing - A Envelope 
Co-financing - Intra ACP 
Co-financing – Administrative 
expenses 

190.0 
13.4 

5.5 

209.4 

171.3 
13.4 

5.4 

190.1 

The following tables, concerning the amounts decided, contracted and paid, show net figures.  
The tables presenting the situation by instrument are annexed. 

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71 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2015INCREASE OR DECREASE IN RESOURCES IN 2016NotesCURRENT LEVEL APPROPRIATIONLoméRegular MS Contributions12,967(3,256)(15)9,695       Aid for refugees120(20)(0)100       Emergency aid (Lomé)140(4)136       Heavily indebted poor countries (Lomé)01,0601,060       Interest-rate subsidies370(291)(7)72       Risk capital1,00016(1)1,015       Stabex1,800(1,077)723       Structural adjustment1,400971,497       Sysmin575(474)101       Total indicative programmes7,562(2,599)(6)(1)4,957       Utilisation of interest income03535CotonouRegular MS Contributions0654(4)650       A Envelope - National Allocations0418(0)(1)417       B Envelope - National Allocations0237(4)(1)233       Interests and other receipts000ACP SUB TOTAL ACP 12,967(2,602)(19)10,346LoméRegular MS Contributions163(116)(0)46       Interest-rate subsidies9(8)1       Risk capital30(24)6       Stabex6(5)1       Sysmin3(1)(0)(1)2       Total indicative programmes115(79)36OCTSUB TOTAL OCT163(116)(0)46TOTAL 8th EDF13,130(2,718)(20)10,392(1)OCTAll decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDFTable 1.18th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2016ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP  
 
 
 
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72 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2015INCREASE OR DECREASE IN RESOURCES IN 2016NotesCURRENT LEVEL APPROPRIATIONLoméRegular MS Contributions0689(17)672       Transfers from 6th EDF - Lomé020(0)(1)20       Transfers from 7th EDF - Lomé0668(17)(1)651CotonouRegular MS Contributions8,9195,727(144)14,502       A Envelope - National Allocations5,3183,398(79)(1)8,637       B Envelope - National Allocations2,108(881)(15)(1)1,212       CDE, CTA and Parliamentary Assembly164(10)154       Implementation costs12552177       Interests and other receipts06363       Other Intra-ACP allocations3002,329(15)(1)2,614       Peace facility0360(6)(1)354       Regional allocations904(105)(29)(1)770       Special allocation R.D. Congo0105105       Special allocation South Sudan0267(3)267       Special allocation Sudan0110(2)110       Voluntary contribution Peace facility03939ACP SUB TOTAL ACP 8,9196,415(161)15,174LoméRegular MS Contributions03(0)3       Transfers from 6th EDF - Lomé000       Transfers from 7th EDF - Lomé03(0)(1)3CotonouRegular MS Contributions10282(2)290       A Envelope - National Allocations0239(2)(1)237       B Envelope - National Allocations044       Regional allocations84048       Studies / Technical assistance OCT2(1)1OCTSUB TOTAL OCT10285(2)293TOTAL 9th EDF8,9296,701(163)15,467(1)(2)(3)OCTAll decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDFFollowing Council Decision 2010/406/EU, 150 million was added from non-mobilisable performance reserve 10th EDF for Sudan (147 million to special allocation Sudan and 3 million to implementation costs)Following Council Decision 2011/315/EU, 200 million was added from non-mobilisable performance reserve 10th EDF for Sudan (194 million to special allocation South Sudan and 6 million to implementation costs)Table 1.29th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2016ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP  
 
 
 
 
 
 
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(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2015INCREASE OR DECREASE IN RESOURCES IN 2016NotesCURRENT LEVEL APPROPRIATIONRegular MS Contributions20,896922321,128       A Envelope - National Allocations013,507(263)(2)13,244       A Envelope reserve13,500(13,500)0       B Envelope - National Allocations02,020(5)(2)2,015       B Envelope reserve1,800(1,800)0       Implementation costs430(1)16445       Institutional and support expenditure0241(9)(2)232       Interests and other receipts07014(2)84       Intra-ACP Reserve2,700(2,700)0       National allocations Reserve A Envelope STABEX0(0)(2)(0)       NIP/RIP reserve683(683)0       Non-mobilisable reserve067176(2)243       Other Intra-ACP allocations01,904(15)(2)1,889       Peace facility06883261,014       Regional allocations01,978(17)(2)1,962       Regional allocations reserve1,783(1,783)0Co-financing02031204       A Envelope - National Allocations01861(3)187       Implementation costs050(3)5       Other Intra-ACP allocations012(3)12       Peace facility01(3)1ACP SUB TOTAL ACP 20,89621222421,332Regular MS Contributions25620(1)275       A Envelope - National Allocations0196(2)(2)193       A Envelope reserve195(195)0       B Envelope - National Allocations01515       B Envelope reserve15(15)0       National allocations Reserve A Envelope STABEX000       Non-mobilisable reserve0192(2)21       Regional allocations040(0)(2)40       Regional allocations reserve40(40)0       Studies / Technical assistance OCT60(1)(2)5OCTSUB TOTAL OCT25620(1)275TOTAL 10th EDF21,15223222321,607(1)(2)(3)OCTTransfer in decommitments from projects of the 9th and previous EDF's to the non mobilisable performance reserve for 377 million less transfer out of reserves to South Sudan for 200 million (to 9th EDF). Year to date the total of the non-mobilisable reserve ACP created was 807 million, of which 350 million has been used (150 million for Sudan, 200 million for South Soudan, both transfered to 9th EDF).Transfers in / from the 10th EDF reservesFor the cofinancings, the table only presents  the commitment appropriations.Table 1.310th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2016ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP  
 
 
 
 
 
 
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(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2015INCREASE OR DECREASE IN RESOURCES IN 2016NotesCURRENT LEVEL APPROPRIATIONRegular MS Contributions29,00885(31)29,062       A Envelope - National Allocations014,79931715,115       B Envelope - National Allocations0194454648       B Envelope reserve071(71)0       Implementation costs1,05301,053       Institutional and support expenditure02442246       Interests and other receipts015116       Intra-ACP Reserve3,590(3,384)(2)203       National allocations Reserve A Envelope STABEX0000       NIP/RIP reserve24,365(19,697)(1,240)3,428       Non-mobilisable reserve065(33)(1)31       Other Intra-ACP allocations02,24012,241       Peace facility0900900       Regional allocations04,6405425,181Co-financing0135       A Envelope - National Allocations0033       Implementation costs0000       Peace facility011EC Internal SLA0101       A Envelope - National Allocations0101ACP SUB TOTAL ACP 29,00887(28)29,067Regular MS Contributions36003363       A Envelope - National Allocations004141       NIP/RIP reserve360(3)(41)316       Non-mobilisable reserve003(1)3       Studies / Technical assistance OCT033OCTSUB TOTAL OCT36003363TOTAL 11th EDF29,36788(24)29,430(1)Non-mobilisable reserves are the results of transfers (decommitments) from the 10th EDF non-mobilisable performance reserve for 225 million euros which are directly transferred to the Bridging Facility (224.7 million) and to other instruments from 11 EDF (0.8 million).OCTTable 1.411th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2016ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP  
 
 
 
 
 
 
Provisional annual accounts of the European Development Fund 2016 

1 

75 

891011TOTAL35354,9934,9934,7144,7146756759,74267510,4174178,87513,43715,15637,8862331,2172,0306484,128(0)(0)15415400002405351,0711,8462,9683,1353,3879,490020320300003,7433,743264352998182,0015,1818,0000105105267267110110393965014,79221,40329,42566,2701111187319050612113204520910,39215,46721,60729,43076,896Cummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2016% of allocation200820092010201120122013201420152016810,391100%10,786(42)(45)(60)(64)(98)(63)(12)(13)915,429100%16,633(54)(116)(9)(297)(72)(381)(170)(104)1021,05897%4,7663,5012,3493,1183,5244,131(95)(156)(80)1113,22045%1,1605,3726,68860,09732,1853,4052,1873,0493,1633,9616215,0346,491Cummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2016% of allocation200820092010201120122013201420152016810,378100%10,541(42)8(13)(46)(11)(37)(16)(6)915,30999%14,2099974769(187)(96)(1)(52)(46)1019,57691%1303,1842,8202,5143,4603,4572,687783541117,76926%7313,2933,74553,03224,8814,1403,3042,5093,2263,3503,3804,0084,234Cummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2016% of allocation200820092010201120122013201420152016810,376100%9,93015215890151816(3)(0)915,05397%10,0111,8061,30490653923114543681016,47676%901,1111,7721,8792,6552,7182,7602,0241,466113,43512%5951,0241,81645,33920,0313,0693,2332,8743,2092,9673,5163,0883,350Table 2.1EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016PROGRESS REPORT(EUR million)EDF                                      ALLOCATIONLoméSundry IncomeTotal indicative programmesTotal Non-Programmable AidTransfers from other fundsSUB TOTAL: REGULAR MS CONTRIBUTIONSNon-mobilisable reserveRegional allocationsRegional allocations reserveSpecial allocation R.D. CongoSpecial allocation South SudanSpecial allocation SudanVoluntary contribution Peace facilitySUB TOTAL: REGULAR MS CONTRIBUTIONSA Envelope - National AllocationsSUB TOTAL: EC INTERNAL SLAA Envelope - National AllocationsImplementation Costs and Interests RevenuesIntra-ACP allocationsSUB TOTAL: CO-FINANCINGTOTALDecisionsAggregate TotalCotonouA Envelope - National AllocationsB Envelope - National AllocationsBridging facilityCDE, CTA and Parliamentary AssemblyCountry reserveImplementation Costs and Interests RevenuesIntra-ACP allocationsIntra-ACP ReserveNational allocations Reserve A Envelope STABEXNIP/RIP reserveTotalAssigned FundsAggregate TotalTotalPaymentsAggregate Total* Negative figures represent decommitmentsTotal 
 
 
 
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76 

%%%(1)(1)(1)35353535100%3535100%3535100%4,9934,9934,9924,992100%4,9874,987100%4,9864,986100%4,7144,7144,7144,714100%4,7074,707100%4,7064,706100%675675674674100%67167199%67067099%4178,87515,15649,2584178,86854%7,97253%30,67162%4178,84250%3,77725%25,47252%4178,80442%1,52410%21,11143%2331,2176484,8652331,21573%60894%4,07884%2321,20972%34053%3,76177%2311,20468%24337%3,55773%(0)(0)154154154154100%154154100%154154100%02401,0712,31124051%38536%1,13149%24050%33731%1,07947%23950%30929%1,04745%2,9683,38711,8152,95853%1,36540%7,23861%2,94449%1,20636%6,84558%2,92442%99729%6,24053%8185,1819,61881655%2,88656%5,70159%79850%2,10641%4,71749%77136%3627%2,41925%105105105105100%105105100%105105100%267267266266100%21721781%777729%11011010910998%10510596%808073%3939242462%242462%242462%319099%3100%18899%73%13671%62%11661%0677%472%41%239%21%119%11397%1100%1398%93%1100%1394%87%1179%11171%171%171%171%152%152%%%%(1)(1)(1)03,401203578003,7434,42620535376%%%(1)(1)(1)10,39215,46729,43098,15510,39115,42949%13,22045%60,09761%10,37815,30946%7,76926%53,03254%10,37615,05338%3,43512%45,33946%(1) % of appropriationsPayments100%97%16,476TOTAL: ALL ALLOCATIONSDecisions100%100%21,058Assigned funds100%99%19,57611TOTAL(1)(1)Appropriations21,6078%9%10Non-mobilisable reserve264Non-mobilisable reserveMobilisable reservesNIP/RIP reserveRegional allocations reserveNational allocations Reserve A Envelope STABEX11TOTAL(1)(1)CotonouCountry reserveIntra-ACP ReserveAppropriations8%9%10EC Internal SLAAssigned fundsPaymentsAppropriationsDecisionsA Envelope - National AllocationsPayments11Co-financingDecisions12Assigned funds11Intra-ACP allocationsAppropriations12Assigned funds2Payments1Appropriations5Decisions4Payments116Implementation Costs and Interests RevenuesDecisions185Assigned funds136A Envelope - National AllocationsAppropriations187Regular MS ContributionsAssigned funds62%Payments62%AppropriationsDecisions62%Payments73%Voluntary contribution Peace facilityDecisions98%Assigned funds96%Special allocation SudanAppropriationsAssigned funds81%Payments29%AppropriationsDecisions100%Payments100%Special allocation South SudanDecisions100%Assigned funds100%Special allocation R.D. CongoAppropriationsAssigned funds98%1,813Payments94%1,285Appropriations2,001Decisions100%1,999Payments99%2,319Regional allocationsDecisions100%2,915Assigned funds99%2,695Intra-ACP allocationsAppropriations3,135Assigned funds100%501Payments100%498Appropriations535Decisions100%505Payments100%Implementation Costs and Interests RevenuesDecisions100%Assigned funds100%CDE, CTA and Parliamentary AssemblyAppropriationsAssigned fundsPaymentsAppropriationsDecisionsPayments99%99%1,879Bridging facilityDecisions100%100%2,023Assigned funds99%99%1,981B Envelope - National AllocationsAppropriations2,030Assigned funds100%100%12,436Payments100%99%10,36613,437Decisions100%100%13,414CotonouA Envelope - National AllocationsAppropriationsPayments99%Regular MS ContributionsDecisions100%Assigned funds99%Transfers from other fundsAppropriationsAssigned funds100%Payments100%AppropriationsDecisions100%Payments100%Total Non-Programmable AidDecisions100%Assigned funds100%Total indicative programmesAppropriationsAssigned funds100%Payments100%Decisions100%11TOTAL(1)(1)LoméSundry IncomeAppropriations8%9%10(EUR million)EDFTable 2.2EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016CLASS OF AID 
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AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)3535100%35100%35100%3535100%35100%35100%4,9574,956(2)100%4,952(2)100%4,951(0)100%4,9574,956(2)100%4,952(2)100%4,951(0)100%100100(0)100%100(0)100%100100%136136100%136100%136100%1,0601,060100%1,060100%1,060100%7272(7)100%69(3)95%69100%1,0151,015100%1,012100%1,012100%723723(0)100%723(0)100%7220100%1,4971,497100%1,497100%1,497100%101101100%101100%101100%4,7044,703(8)100%4,697(4)100%4,6960100%417417(0)100%417(0)100%417100%417417(0)100%417(0)100%417100%233233(2)232(1)99%2310100%233233(2)100%232(1)99%2310100%0010,34610,345(13)100%10,333(6)100%10,330(0)100%36360100%35(0)98%35100%36360100%35(0)98%35100%11100%1100%1100%66100%6100%6100%11100%1100%1100%22(0)100%2100%2100%1010(0)100%10100%10100%4646(0)100%46(0)99%46100%10,39210,391(13)100%10,378(6)100%10,376(0)100%TOTAL OCT    (B)TOTAL: ACP+OCT    (A+B)OCTRegular MS ContributionsTOTAL ACP     (A)Lomé      Total indicative programmesSUB TOTAL: TOTAL INDICATIVE PROGRAMMES      Interest-rate subsidies      Risk capital      Stabex      SysminSUB TOTAL: TOTAL NON-PROGRAMMABLE AIDSUB TOTAL: TOTAL NON-PROGRAMMABLE AIDACP Regular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earningsSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESACP Regular MS ContributionsLomé      Utilisation of interest incomeSUB TOTAL: SUNDRY INCOME      Total indicative programmesSUB TOTAL: TOTAL INDICATIVE PROGRAMMES      Aid for refugees      Emergency aid (Lomé)      Heavily indebted poor countries (Lomé)      Interest-rate subsidies      Risk capital      Stabex      Structural adjustment      SysminCREDITSDECISIONSASSIGNED FUNDSPAYMENTSTable 2.3EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016CLASS OF AIDACP + PTOM - 8 th EDF(EUR million) 
 
 
 
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AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)2020(0)100%20100%20100%651651(3)100%648(0)100%647(0)100%672671(3)100%668(0)100%667(0)100%8,6378,631(49)100%8,605(20)100%8,5696100%8,6378,631(49)100%8,605(20)100%8,5696100%1,212149(0)149(0)100%1490100%1,050(5)1,044(7)99%1,040(0)100%1111100%11100%1,2121,210(6)100%1,204(7)99%1,200(0)100%154154100%154100%154100%154154100%154100%154100%177177100%1770100%176099%6363100%63100%63100%240240100%2400100%2390100%2,6142,604(21)100%2,591(14)99%2,5711499%354354(0)100%353(0)100%353100%2,9682,958(21)100%2,944(15)100%2,9241499%770768(24)100%752(4)98%726597%770768(24)100%752(4)98%726597%105105100%105100%105100%105105100%105100%105100%2672660100%217182%772335%2672660100%217182%772335%110109(0)98%105(1)97%802076%110109(0)98%105(1)97%802076%392462%24100%24100%392462%24100%24100%15,17415,136(103)100%15,018(45)99%14,7646898%00100%0100%0100%33100%3100%3100%33100%3100%3100%237237(1)100%237(1)100%235(0)99%237237(1)100%237(1)100%235(0)99%444100%4100%44100%4100%4100%11100%1100%1100%11100%1100%1100%48480100%46097%45098%48480100%46097%45098%293293(1)100%291(1)99%288099%15,46715,429(104)100%15,309(46)99%15,0536898%TOTAL: OCT    (B)TOTAL: ACP+OCT    (A+B)OCTRegular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aidSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONSOCTRegular MS ContributionsLomé      Transfers from 6th EDF - Lomé      Transfers from 7th EDF - LoméSUB TOTAL: TRANSFERS FROM OTHER FUNDSSUB TOTAL: SPECIAL ALLOCATION SUDAN      Voluntary contribution Peace facilitySUB TOTAL: VOLUNTARY CONTRIBUTION PEACE FACILITYTOTAL: ACP     (A)      Special allocation R.D. CongoSUB TOTAL: SPECIAL ALLOCATION R.D. CONGO      Special allocation South SudanSUB TOTAL: SPECIAL ALLOCATION SOUTH SUDAN      Special allocation Sudan      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONSACP Regular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earnings      Emergency aid      Heavily indebted poor countriesSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      CDE, CTA and Parliamentary AssemblySUB TOTAL: CDE, CTA AND PARLIAMENTARY ASSEMBLY      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESACP Regular MS ContributionsLomé      Transfers from 6th EDF - Lomé      Transfers from 7th EDF - LoméSUB TOTAL: TRANSFERS FROM OTHER FUNDSCREDITSDECISIONSASSIGNED FUNDSPAYMENTSTable 2.4EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016CLASS OF AIDACP + PTOM - 9 th EDF(EUR million) 
 
 
 
Annual accounts of the European Development Fund 2016 

79 

AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)13,24413,221(154)100%12,30143093%10,2431,05883%13,24413,221(154)100%12,30143093%10,2431,05883%2,015204(6)193595%1791193%850(5)830498%7665392%4949100%49100%905(0)896(1)99%8732397%2,0152,008(11)100%1,968898%1,8668795%445431297%4291100%4272100%8469(0)82%67(0)97%66199%529500194%496099%494399%232232(6)100%231(6)100%211091%1,8891,889(12)100%1,824(2)97%1,49212782%1,01479410678%640(20)81%616(1)96%3,1352,9158893%2,695(28)92%2,31912686%1,9621,960(17)100%1,77714991%1,26616471%1,9621,960(17)100%1,77714991%1,26616471%1871851499%136(21)73%116985%1871851499%136(21)73%116985%54184%2053%1050%54184%2053%1050%1211(0)97%11(1)95%10194%11100%199%1100%1212(0)97%11(1)96%11194%00000(0)(0)0000243243193193(2)100%136270%1231091%193193(2)100%136270%1231091%15907077%7099%66100%6100%15150100%13086%13099%55100%5098%5(0)91%55100%5098%5(0)91%40400100%35089%20756%40400100%35089%20756%0000000212121,60721,058(80)97%19,57654193%16,4761,46684%SUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEXRegular MS ContributionsAllocationsTOTAL: ACP+OCT (INCL. RESERVES)  SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aid      Other chocs with budgetary impactSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONS      B Envelope reserveSUB TOTAL: COUNTRY RESERVE      National allocations Reserve A Envelope STABEXSUB TOTAL: REGIONAL ALLOCATIONS RESERVENon-mobilisable reserveReserves      Non-mobilisable reserveOCT      A Envelope - National AllocationsMobilisable reservesReserves      A Envelope reserveNon-mobilisable reserveReserves      Non-mobilisable reserveSUB TOTAL: NON-MOBILISABLE RESERVE      Regional allocations reserveSUB TOTAL: REGIONAL ALLOCATIONS RESERVESUB TOTAL: NON-MOBILISABLE RESERVE      National allocations Reserve A Envelope STABEXSUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVE      Regional allocations reserve      A Envelope reserve      B Envelope reserveSUB TOTAL: COUNTRY RESERVE      Intra-ACP ReserveSUB TOTAL: INTRA-ACP RESERVESUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earnings      Emergency aid      Heavily indebted poor countries      Other chocs with budgetary impactSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Institutional and support expenditure      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsRegular MS ContributionsAllocationsACP       A Envelope - National AllocationsSUB TOTAL: REGIONAL ALLOCATIONSCo-financingAllocations      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      Implementation costsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONSMobilisable reservesReservesCREDITSDECISIONSASSIGNED FUNDSPAYMENTSTable 2.5EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016CLASS OF AIDACP + PTOM - 10 th EDF(EUR million) 
 
Annual accounts of the European Development Fund 2016 

80 

AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)15,1157,9314,64352%3,7512,26847%1,51784440%15,1157,9314,64352%3,7512,26847%1,51784440%64849933633121966%23715272%109109998%5559%64860844494%34022856%24315771%001,05337413736%32912788%30211192%168252%6170%6396%1,06838213936%33512788%30811492%246106543%782173%602077%2,2413596816%2513570%20620682%9009000100%87827998%73121583%3,3871,3657340%1,20633588%99744183%5,1812,8861,34456%2,10675973%36225217%5,1812,8861,34456%2,10675973%36225217%333100%333100%0011100%1100%11100%1100%00203203003,4283,42831311171%1100%173%1171%1100%173%414141100%262663%7727%414141100%262663%7727%00330100%3290%1153%330100%3290%1153%3163163329,43013,2206,68845%7,7693,74559%3,4351,81644%SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      Bridging facility SUB TOTAL: BRIDGING FACILITY      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESMobilisable reserves      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONSRegular MS ContributionsAllocationsTOTAL: ACP+OCT (INCL. RESERVES)    OCT      A Envelope - National AllocationsNon-mobilisable reserveReserves      Non-mobilisable reserveReserves      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVESUB TOTAL: NON-MOBILISABLE RESERVESUB TOTAL: COUNTRY RESERVEReserves      Intra-ACP ReserveSUB TOTAL: INTRA-ACP RESERVE      National allocations Reserve A Envelope STABEXSUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVENon-mobilisable reserveReserves      Non-mobilisable reserveSUB TOTAL: NON-MOBILISABLE RESERVEEC Internal SLASUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aid      Other chocs with budgetary impactSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Bridging facility SUB TOTAL: BRIDGING FACILITY      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Institutional and support expenditure      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsRegular MS ContributionsAllocationsACP       A Envelope - National AllocationsSUB TOTAL: REGIONAL ALLOCATIONSCo-financingAllocations      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      Implementation costsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONSMobilisable reservesReserves      B Envelope reserveCREDITSDECISIONSASSIGNED FUNDSPAYMENTSTable 2.6EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2016CLASS OF AIDACP + PTOM - 11 th EDF(EUR million) 
Annual accounts of the European Development Fund 2016 

ANNUAL REPORT ON IMPLEMENTATION - 
FUNDS MANAGED BY THE EUROPEAN 
INVESTMENT BANK 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

EUROPEAN INVESTMENT BANK 

CA/501/17 

9 March 2017 

Document 17/098 

B O A R D   O F   D I R E C T O R S  

IN VESTMENT  FAC IL IT Y  

FINANCIAL STATEMENTS 

AS AT 31 DECEMBER 2016 

  Statement of financial position 

  Statement of profit or loss and other 

comprehensive income 

  Statement of changes in contributors’ resources 

  Statement of cash flows 

  Notes to the financial statements 

 

Independent auditor’s report 

ORG.: E 

CONFIDENTIAL 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF FINANCIAL POSITION 
AS AT 31 DECEMBER 2016 
(In EUR’000) 

Notes 

31.12.2016 

31.12.2015 

ASSETS 

Cash and cash equivalents 

Amounts receivable from contributors 

Held-to-maturity financial assets 

Derivative financial instruments 

Loans and receivables 

Available-for-sale financial assets 

Other assets 

Total assets 

LIABILITIES AND CONTRIBUTORS' RESOURCES 

LIABILITIES 

Derivative financial instruments 

Deferred income 

Provisions for guarantees issued 

Amounts owed to third parties 

Other liabilities 

Total liabilities 

CONTRIBUTORS' RESOURCES 

Member States Contribution called 

Fair value reserve 

Retained earnings 

5 

9/16 

10 

6 

7 

8 

11 

6 

12 

13 

14 

15 

360,817 

86,395 

169,398 

6,920 

1,729,380 

516,884 

345 

448,995 

- 

228,521 

311 

1,460,057 

419,353 

27 

2,870,139 

2,557,264 

25,189 

26,283 

625 

116,114 

2,546 

8,219 

29,325 

- 

101,202 

2,364 

170,757 

141,110 

16 

2,377,000 

2,157,000 

142,884 

179,498 

163,993 

95,161 

Total contributors' resources 

2,699,382 

2,416,154 

Total liabilities and contributors' resources 

2,870,139 

2,557,264 

83 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME  
FOR THE YEAR ENDED 31 DECEMBER 2016 
(In EUR’000) 

Notes 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

Interest and similar income 

Interest and similar expenses 

Net interest and similar income 

Fee and commission income 

Fee and commission expenses 

Net fee and commission income 

Fair value change of derivative financial instruments  

Net realised gains on available-for-sale financial assets 

Net foreign exchange loss 

Net result on financial operations 

Change in impairment on loans and receivables, net of reversal 

Change in provisions for guarantees 

Impairment on available-for-sale financial assets 

General administrative expenses 

Profit/loss for the year 

Other comprehensive income: 

Items that are or may be reclassified to profit or loss: 

Available-for-sale financial assets – Fair value reserve   

1. Net change in fair value of available-for-sale financial assets   

2. Net amount transferred to profit or loss 

Total available-for-sale financial assets 

Total other comprehensive income 

Total comprehensive income for the year 

18 

18 

19 

19 

20 

7 

13 

8 

21 

8 

106,698 

-2,307 

90,385 

-1,556 

104,391 

88,829 

699 

-48 

651 

-10,361 

6,504 

-14,995 

932 

-63 

869 

6,276 

33,878 

-52,483 

-18,852 

-12,329 

44,365 

-242 

-2,493 

-43,483 

-33,988 

- 

-3,646 

-43,045 

84,337 

-3,310 

-14,624 

-6,485 

-21,109 

-21,109 

63,228 

43,394 

-35,523 

7,871 

7,871 

4,561 

84 

 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES 
FOR THE YEAR ENDED 31 DECEMBER 2016 
(In EUR’000) 

At 1 January 2016 

Notes 

2,157,000 

163,993 

95,161 

2,416,154 

Contribution 
called 

Fair value 
reserve  

Retained 
earnings  

Total  

Member States contribution called during the year 

16 

220,000 

Profit for the year 2016 

Total other comprehensive income for the year 

- 

- 

- 

- 

- 

220,000 

84,337 

84,337 

-21,109 

- 

-21,109 

Changes in contributors’ resources 

220,000 

-21,109 

84,337 

283,228 

At 31 December 2016 

2,377,000 

142,884 

179,498 

2,699,382 

At 1 January 2015 

Contribution 
called 

Fair value 
reserve  

Retained 
earnings  

Total  

2,057,000 

156,122 

98,471 

2,311,593 

Member States contribution called during the year 

16 

100,000 

Loss for the year 2015 

Total other comprehensive income for the year 

- 

- 

- 

- 

- 

100,000 

-3,310 

-3,310 

7,871 

- 

7,871 

Changes in contributors’ resources 

100,000 

7,871 

-3,310 

104,561 

At 31 December 2015 

2,157,000 

163,993 

95,161 

2,416,154 

85 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 31 DECEMBER 2016 
(In EUR’000) 

OPERATING ACTIVITIES 

Profit/(loss) for the financial year 

Adjustments made for: 

Impairment on available-for-sale financial assets   

Net change in impairment on loans and receivables    

Interest capitalised on loans and receivables  

Change in accrued interest and amortised cost on loans and receivables 

Net change in provisions for guarantees issued 

Change in accrued interest and amortised cost on held-to-maturity financial assets 

Change in deferred income 

Effect of exchange rate changes on loans   

Effect of exchange rate changes on available-for-sale financial assets  

Effect of exchange rate changes on cash held  

Loss on operating activities before changes in operating assets and liabilities 

Loan disbursements 

Repayments of loans 

Change in accrued interest on cash and cash equivalent 

Fair value changes on derivatives  

Increase in held-to-maturity financial assets 

Maturities of held-to-maturity financial assets 

Increase in available-for-sale financial assets 

Repayments/sales of available-for-sale financial assets   

(Increase)/decrease in other assets 

Increase/(decrease) in other liabilities 

Increase in amounts payable to the European Investment Bank 

Net cash flows used in operating activities 

FINANCING ACTIVITIES 

Contribution received from Member States  

Amounts received from Member States with regard to interest subsidies and technical 
assistance 

Amounts paid on behalf of Member States with regard to interest subsidies and technical 
assistance 

Net cash flows from financing activities 

Net decrease in cash and cash equivalents 

Summary statement of cash flows: 

Notes 

From 01.01.2016 
to 31.12.2016 

From 01.01.2015 
to 31.12.2015 

84,337 

-3,310 

8 

7 

7 

13 

10 

7 

7 

7 

5 

10 

10 

8 

8 

16 

2,493 

-44,365 

-7,183 

-5,843 

625 

-1,126 

-3,042 

-35,025 

-5,125 

-1,106 

-15,360 

-528,376 

351,468 

2 

10,361 

-1,159,704 

1,219,953 

-153,986 

37,978 

-318 

182 

423 

3,646 

33,988 

-13,262 

1,594 

- 

12 

-1,985 

-73,447 

-9,385 

-12,216 

-74,365 

-282,784 

205,772 

4 

-6,276 

-1,545,550 

1,417,005 

-67,449 

64,791 

5,495 

-227 

4,668 

-237,377 

-278,916 

133,605 

30,000 

-15,510 

148,095 

-89,282 

100,000 

92,590 

-22,290 

170,300 

-108,616 

Cash and cash equivalents at the beginning of financial year 

448,998 

545,398 

Net cash from: 

Operating activities 

Financing activities 

Effects of exchange rate changes on cash and cash equivalents 

Cash and cash equivalents at the end of financial year 

Cash and cash equivalents are composed of: 

Cash in hand  

Term deposits (excluding accrued interest) 

Commercial papers 

86 

-237,377 

148,095 

1,106 

360,822 

51,462 

259,342 

50,018 

360,822 

-278,916 

170,300 

12,216 

448,998 

71,405 

290,576 

87,017 

448,998 

5 

5 

 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

Notes to the financial statements as at 31 December 2016 

1  General information 

The Investment Facility (“the Facility” or “IF”) has been established within the framework of the Cotonou Agreement (the “Agreement”) on co-
operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the “ACP States”) and the 
European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010. 

The Facility is not a separate legal entity and the European Investment Bank (“EIB” or “the Bank”) manages the contributions on behalf of the 
Member States (“Donors”) in accordance with the terms of the Agreement and acts as an administrator of the Facility. 

Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute  with the amounts allocated to 
finance  the  IF  and  grants  for  the  financing  of  the  interest  subsidies  as  provided  for  under  the  multi-annual  financial  frameworks  (First 
Financial Protocol covering the period 2000 - 2007 and referred to as the 9th European Development Fund (EDF), Second Financial Protocol 
covering the period 2008 - 2013 and referred to as the 10th EDF and the Third Financial Protocol covering the period 2014 - 2020 referred to 
as the 11th EDF). The EIB is entrusted with the management of: 

- 

- 

the Facility, a EUR 3,685.5 million  risk-bearing revolving fund geared to fostering private sector investment in ACP countries of 
which EUR 48.5 million are allocated to Overseas Countries and territories (“OCT countries”); 

grants for the financing of interest  subsidies  worth max. EUR 1,220.85 million for ACP countries and max. EUR 8.5 million for 
OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”). 

The present financial statements cover the period from 1 January 2016 to 31 December 2016. 

On a proposal from the Management Committee of EIB, the Board of Directors of EIB adopted the Financial Statements on 9 March 2017, 
and authorised their submission to the Board of Governors for approval by 25 April 2017. 

2  Significant accounting policies 

2.1  Basis of preparation – Statement of compliance 

The Facility’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by 
the European Union.  

2.2  Significant accounting judgments and estimates 

The  preparation  of  financial  statements  requires  the  use  of  accounting  estimates.  It  also  requires  the  European  Investment  Bank’s 
Management to exercise its judgment in the process of applying the Investment Facility’s accounting policies. The areas involving a higher 
degree  of  judgment  or  complexity,  or  areas  where  assumptions  and  estimates  are  significant  to  the  financial  statements  are  disclosed 
hereafter. 

The most significant use of judgments and estimates are as follows: 

 

Measurement of fair values of financial instruments 

Fair  values  of  financial  assets  and  financial liabilities  that  are  traded  in  active  markets  are  based on  quoted  market  prices  or  broker  price 
quotations. Where the fair values cannot be derived from active markets, they are determined using a variety of valuation techniques that 
include the use of mathematical models. The input to these models is taken from observable markets where possible, but where  this is not 
feasible, a degree of judgement is required in establishing fair values. The valuations are categorised into different levels in the fair value 
hierarchy based on the inputs used in the valuation techniques as described and disclosed in Notes 2.4.3 and 4. 

These  valuation  techniques  may  include  net  present  value  and  discounted  cash  flow  models,  comparison  to  similar  instruments  for  which 
market  observable  prices  exist,  Black-Scholes  and  polynomial  option  pricing  models  and  other  valuation  models.  Assumptions  and  inputs 
used  in  valuation  techniques  include  risk-free  and  benchmark  interest  rates,  credit  spreads  used  in  estimating  discount  rates,  bond  and 
equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. 

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or 
paid to transfer the liability in an orderly transaction between market participants at the measurement date. 

87 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

The Facility uses widely recognised valuation models for determining the fair  value of common and more simple financial instruments, like 
interest  rate  and  currency  swaps  that  use  only  observable  market  data  and  require  limited  management  judgement  and  estimation. 
Observable prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and 
simple over the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for 
management  judgement  and  estimation  and  also  reduces  the  uncertainty  associated  with  determination  of  fair  values.  Availability  of 
observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and 
general conditions in the financial markets. 

For more complex instruments, the Facility uses own valuation models, which are developed from recognised valuation models. Some or all 
of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated 
based  on  assumptions.  Example  of  instruments  involving  significant  unobservable  inputs  includes  certain  loans  and  guarantees  for  which 
there is no active market. Valuation models that employ significant unobservable inputs require a higher degree of management judgement 
and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate 
valuation model to be used, determination of expected future cash flows on the financial instrument being valued, determination of probability 
or counterparty default and prepayments and selection of appropriate discount rates. 

The  Facility  has  an  established  control  framework  with  respect  to  the  measurement  of  fair  values.  This  framework  includes  the  EIB’s 
Investment Bank’s Risk Management and Market Data Management functions. These functions are independent of front office management 
and are responsible for verifying significant fair value measurements. Specific controls include: 

- 

- 

- 

- 

- 

Verification of observable pricing; 

A review and approval process for new valuation models and changes to existing models; 

Calibration and back testing of models against observed market transactions; 

Analysis and investigation of significant valuation movements; 

Review of significant unobservable inputs and valuation adjustments. 

Where  third-party  information  such  as  broker  quotes  or  pricing  services  are  used  to  measure  fair  value,  the  Facility  verifies  that  such 
valuations meet the requirements of IFRS. This includes the following: 

- 

- 

- 

Determining where broker quote or pricing service pricing is appropriate; 

Assessing whether a particular broker quote or pricing service is reliable; 

Understanding how the fair value has been arrived at and the extent to which it represents actual market transactions; 

-  When  prices  for  similar  instruments  are  used  to  measure  fair  value,  how  these  prices  have  been  adjusted  to  reflect  the 

characteristics of the instrument subject to measurement. 

 

Impairment losses on loans and receivables 

The Facility reviews its loans and receivables at each reporting date to assess whether an allowance for impairment should be recorded in 
the statement of profit or loss and other comprehensive income. In particular, judgment by the European Investment Bank’s Management is 
required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates 
are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. In addition to 
specific  allowances  against  individually  significant  loans  and  receivables,  the  Facility  may  also  book  a  collective  impairment  allowance 
against exposures which have not been individually identified as impaired and have a greater risk of default than when originally granted. 

In principle, a loan is considered as impaired when payment of interest and principal are past due by 90 days or more and, at the same time, 
the European Investment Bank’s Management considers that there is an objective indication of impairment. 

 

Provisions on financial guarantees 

The  Facility  reviews  its  guarantee  contracts  at  each  reporting  date  to  assess  whether  a  provision  should  be  recorded  in  the  statement  of 
profit  or  loss  and  other  comprehensive  income.  For  determining  the  provision  particular  judgement  is  required  in  making  estimates  and 
assumptions about a number of factors, such as: 

- 

- 

- 

amount and timing of future cash flows; 

utilisation level of the guarantees; 

discount factors applied on the estimated cash flows. 

 

Valuation of unquoted available-for-sale equity investments 

Valuation of unquoted available-for-sale equity investments is normally based on one of the following:  

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

recent arm’s length market transactions;  

current fair value of another instrument that is substantially the same;  

the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics;  

adjusted net assets method; or  

other valuation models. 

- 

- 

- 

- 

- 

The determination of the cash flows and discount factors for unquoted available-for-sale equity investments requires significant estimation. 
The  Facility  calibrates  the  valuation  techniques  periodically  and  tests  them  for  validity  using  either  price  from  observable  current  market 
transactions in the same instrument or from other available observable market data. 

 

Impairment of available-for-sale financial assets 

The Facility treats available-for-sale equity investments as impaired when there has been a significant or prolonged decline in the fair value 
below  its  cost  or  where  other  objective  evidence  of  impairment  exists.  The  determination  of  what  is  “significant”  or  “prolonged”  requires 
judgment.  The  Facility  treats  “significant”  generally  as  30%  or  more  and  “prolonged”  greater  than  12  months.  In  addition,  the  Facility 
evaluates other factors, including normal volatility in share price for quoted equities and the future  cash flows and the discount factors for 
unquoted equities. 

 

Consolidation of entities in which the Facility holds interest  

The Facility made significant judgements that none of the entities in which it holds interest, are controlled by the Facility. This is due to the 
fact that in all such entities, either the General Partner or the Fund Manager or the Management Board have the sole responsibility for the 
management and control of the activities and affairs of the partnership and have the power and authority to do all things necessary to carry 
out the purpose and objectives of the partnership complying with the investment and policy guidelines. 

2.3  Changes in accounting policies 

Except  for  the  changes  below,  the  Facility  has  consistently  applied  the  accounting  policies  set  out  in  Note  2.4  to  all  periods  presented  in 
these financial statements. The Facility has adopted the following new standards and amendments to standards. 

Standards adopted 

The following standards, amendments to standards and interpretations were adopted in the preparation of these financial statements: 

- 

- 

Amendments to IAS 1 ‘Presentation of financial statements’ – Disclosure initiative; 

Annual Improvements to IFRSs 2012–2014 Cycle – various standards. 

These changes had no material impact on the Facility’s financial statements. 

Standards issued but not yet effective 

The following standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2016, and 
have not been applied in preparing these financial statements. Those of which may be relevant for the Facility are set out below.   

IFRS 9 Financial instruments 

The last part of the standard was issued on 24 July 2014 and replaces the existing guidance in IAS 39 Financial Instruments:  Recognition 
and  Measurement.  IFRS  9  addresses  the  classification,  measurement  and  derecognition  of  financial  assets  and  financial  liabilities, 
introduces a new expected credit loss model for impairment on financial assets and introduces new rules for hedge accounting.  

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are 
managed  and  their  cash  flow  characteristics.  IFRS  9  contains  three  principal  classification  categories  for  financial  assets:  measured  at 
amortised  cost,  fair  value  through  other  comprehensive  income  (‘’FVOCI’’)  and  fair  value  through  profit  or  loss  (‘’FVTPL’’).  The  standard 
eliminates  the  existing  IAS  39  categories  of  held  to  maturity,  loans  and  receivables  and  available  for  sale.  Under  IFRS  9,  derivatives 
embedded  in  contracts  where  the  host  is  a  financial  asset  in  the  scope  of  the  standard  are  never  bifurcated.  Instead,  the  hybrid  financial 
instrument as a whole is assessed for classification.  

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IFRS  9  largely  retains  the  existing  requirements  in  IAS  39  for  the  classification  of financial liabilities.  However,  under  IAS  39  all  fair  value 
changes of liabilities designated as at FVTPL are recognised in profit or loss, whereas under IFRS 9 these fair value changes are generally 
presented as follows: 

- 

- 

the  amount  of  change  in  the  fair  value  that  is  attributable  to  changes  in  the  credit  risk  of  the  liability  is  presented  in  other 
comprehensive income (‘’OCI’’); and 
the remaining amount of change in the fair value is presented in profit or loss.  

IFRS  9  replaces  the  ‘incurred  loss’  model  in  IAS  39  with  a  forward-looking  ‘expected  credit  loss’  (‘’ECL’’)  model.  This  will  require 
considerable judgement as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. The 
new impairment model will apply to financial assets measured at amortised cost or FVOCI, except for investments in equity instruments, and 
to contract assets. 

Under IFRS 9, loss allowances will be measured on either of the following bases: 

• 

• 

12-month ECLs. These are ECLs that result from possible default events within the 12 month after the reporting date; and 

lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument. 

Lifetime  ECL  measurement  applies  if  the  credit  risk  of  a  financial  asset  at  the  reporting  date  has  increased  significantly  since  initial 
recognition  and  12-month  ECL  measurement  applies  if  it  has  not.  An  entity  may  determine  that  a  financial  asset’s  credit  risk  has  not 
increased significantly if the asset has low credit risk at the reporting date. 

While the Facility has not yet undertaken a detailed assessment of the impairment methodologies that it will apply under IFRS 9, it may result 
in an earlier recognition of credit losses with higher volatility. 

IFRS  9  will  require  extensive  new  disclosures,  in  particular  about  credit  risk  and  expected  credit  losses.  The  Facility’s  preliminary 
assessment included an analysis to identify data gaps against current processes and the Facility plans to implement the system and controls 
changes that it believes will be necessary to capture the required data. 

IFRS 9 has been endorsed by the EU on 22 November 2016 and is effective for annual reporting periods beginning on or after 1  January 
2018, with early adoption permitted. The Facility does not intend to adopt the standard earlier than its effective date. 

The Facility is currently performing a detailed assessment of the impact resulting from the application of IFRS 9. 

IFRS 15 Revenue from Contracts with Customers  

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing 
revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 
15 standard has been endorsed  by the EU  is on 22 September 2016 and is effective for annual reporting periods beginning on or after  1 
January 2018, with early adoption permitted. The Facility has not yet determined the extent of the impact of this standard. 

Amendment to IAS 7 ‘Cash flow statements’ – Disclosure initiative 

The  amendments  require  disclosures  that  enable  users  of  financial  statements  to  evaluate  changes  in  liabilities  arising  from  financing 
activities,  including  both  changes  arising  from  cash  flow  and  non-cash  changes.  Amendments  are  effective  for  annual  reporting  periods 
beginning on or after 1 January 2017, with early adoption permitted. Amendments are expected to be endorsed by the EU by the end of the 
year. The Facility does not plan to adopt this standard early and does not expect it to cause any material impact on the Facility’s financial 
statements. 

2.4  Summary of significant accounting policies 

The statement of financial position represents assets and liabilities in decreasing order of liquidity and does not distinguish between current 
and non-current items. 

2.4.1   

Foreign currency translation 

The Facility uses the Euro (EUR) for presenting its financial statements, which is also the functional currency. Except as otherwise indicated, 
financial information presented in EUR has been rounded to the nearest thousand.  

Foreign currency transactions are translated, at the exchange rate prevailing on the date of the transaction.  

Monetary  assets  and  liabilities  denominated  in  currencies  other  than  Euro  are  translated  into  Euro  at  the  exchange  rate  prevailing  at  the 
statement  of  financial  position  date.  The  gain  or  loss  arising  from  such  translation  is  recorded  in  the  statement  of  profit  or  loss  and  other 
comprehensive income. 

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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates 
of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the 
date when the fair value was determined. 

Exchange  differences  arising  on  the  settlement  of  transactions  at  rates  different  from  those  at  the  date  of  the  transaction,  and  unrealised 
foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognised in the statement of profit or loss 
and other comprehensive income. 

The elements of the statement of profit or loss and other comprehensive income are translated into Euro on the basis of the exchange rates 
prevailing at the date of the transaction. 

2.4.2   

Cash and cash equivalents 

The  Facility  defines  cash  and  cash  equivalents  as  current  accounts,  short-term  deposits  or  commercial  papers  with  original  maturities  of 
three months or less. 

2.4.3   

 Financial assets other than derivatives 

Financial assets are accounted for using the settlement date basis. 

 

Fair value of financial instruments 

Fair  value  is  the  price  that  would  be  received  to  sell  an  asset  or  paid  to  transfer  a  liability  in  an  orderly  transaction  between  market 
participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Facility has access at 
that date.  

When applicable, the EIB on behalf of the Facility measures the fair value of an instrument using the quoted price in an active market for that 
instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide 
pricing information on an on-going basis. 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active 
markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models 
is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. 
The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction. 

The  EIB  measures  fair  values  using  the  following  fair  value  hierarchy  that  reflects  the  significance  of  the  inputs  used  in  making  the 
measurements: 

- 

- 

- 

Level  1:  inputs  that  are  unadjusted  quoted  market  prices  in  active  markets  for  identical  instruments  to  which  the  Facility  has 
access. 

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. 
derived  from  prices).  This  category  includes  instruments  valued  using  quoted  market  prices  in  active  markets  for  similar 
instruments,  quoted  prices  for  identical  or  similar  instruments  in  markets  that  are  considered  less  than  active  or  other  valuation 
techniques where all significant inputs are directly or indirectly observable from market data. 

Level 3: inputs that are not observable. This category includes all instruments where the valuation technique includes inputs not 
based  on  observable  data  and  the  unobservable  inputs  have  a  significant  effect  on  the  instrument’s  valuation.  This  category 
includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or 
assumptions are required to reflect differences between the instruments. 

The Facility recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has 
occurred. 

 

Held-to-maturity financial assets 

Held-to-maturity financial assets comprise quoted bonds with the intention of holding them to maturity, and commercial papers with original 
maturities of more than three months. 

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Those  bonds  and  commercial  papers  are  initially  recorded  at  their  fair  value  plus  any  directly  attributable  transaction  cost.  The  difference 
between  entry  price  and  redemption  value  is  amortised  in  accordance  with  the  effective  interest  method  over  the  remaining  life  of  the 
instrument. 

The Facility assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of 
financial  assets  is  impaired.  A  financial  asset  or  a  group  of  financial  assets  is  deemed  to  be  impaired  if,  and  only  if,  there  is  objective 
evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) 
and that loss event (or event) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can 
be  reliably  estimated.  Impairment  loss  is  recognised  in  the  statement  of  profit  and  loss  and  the  amount  of  the  loss  is  measured  as  the 
difference between the carrying value and the present value of estimated future cash flows discounted at the instrument’s original effective 
interest rate. 

 

Loans 

Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. They are initially recorded 
at  cost  (net  disbursed  amounts),  which  is  the  fair  value  of  the  cash  given  to  originate  the  loan,  including  any  transaction  costs,  and  are 
subsequently measured at amortised cost, using the effective yield method, less any provision for impairment or uncollectability. 

 

Available-for-sale financial assets 

Available-for-sale  financial  assets  are  those  which  are  designated  as  such  or  do  not  qualify  to  be  classified  as  designated  at  fair  value 
through profit  or  loss, held-to-maturity or loans and receivables. They include direct equity investments and investments in venture capital 
funds and are initially recorded at fair value plus transaction costs. 

After initial measurement, available-for-sale financial assets are subsequently carried at fair value. Note the following details for the fair value 
measurement of equity investments, which cannot be derived from active markets: 

a.  Venture capital funds 

The fair value of each venture capital fund is based on the latest available Net Asset Value (NAV), reported by the fund, if calculated based 
on  international  valuation  guidelines  recognised  to  be  in  line  with  IFRS  (for  example:  the  International  Private  Equity  and  Venture  Capital 
Valuation  guidelines,  IPEV  Guidelines,  as  published  by  the  European  Venture  Capital  Association).  The  Facility  may  however  decide  to 
adjust the NAV reported by the fund if there are issues that may affect the valuation. 

b.  Direct equity investments 

The fair value of the investment is based on the latest set of financial statements available, re-using, if applicable, the same model as the 
one used at the acquisition of the participation. 

Unrealised  gains  or  losses  on  venture  capital  funds  and  direct  equity  investments  are  reported  in  contributors’  resources  until  such 
investments are sold, collected or disposed of, or until such investments are determined to be impaired. If an available-for-sale investment is 
determined to be impaired, the cumulative unrealised gain or loss previously recognised in equity is transferred to the statement of profit or 
loss and other comprehensive income. 

For  unquoted  investment,  the  fair  value  is  determined  by  applying  recognised  valuation  techniques  (for  example  adjusted  net  assets, 
discounted  cash  flows  or  multiple).  These  investments  are  accounted  for  at  cost  when  the  fair  value  cannot  be  reliably  measured.  To  be 
noted that in the first 2 years of the investments, they are recognised at cost. 

The  participations  acquired  by  the  Facility  typically  represent  investments  in  private  equity  or  venture  capital  funds.  According  to  industry 
practice,  such  investments  are  generally  investments  jointly  subscribed  by  a  number  of  investors,  none  of  whom  is  in  a  position  to 
individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in a 
governing  body  of  such  fund  does  not  in  principle  entitle  such  investor  to  influence  the  day-to-day  operations  of  the  fund.  In  addition, 
individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on dividends 
or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders agreement governing 
the  rights  and  obligations  of  the  management  and  all  shareholders  of  the  fund.  The  shareholders’  agreement  also  generally  prevents 
individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel or obtaining privileged 
access to essential technical information. The Facility’s investments are  executed in line  with the above stated industry  practice, ensuring 
that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10 and IAS 28 over any of these 
investments, including those investments in which the Facility holds over 20 % of the voting rights. 

 

Guarantees 

Financial guarantee contracts are contracts that require the Facility to make specified payments to reimburse the holder for a loss it incurs 
because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. 

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Under  the  existing  rules,  these  guarantees  do  not  meet  the  definition  of  an  insurance  contract  (IFRS  4  Insurance  Contracts)  and  are 
accounted  for  under  IAS  39  Financial  Instruments:  Recognition  and  Measurement,  either  as  “Derivatives”  or  as  “Financial  Guarantees”, 
depending on their features and characteristics as defined by IAS 39. 

The accounting policy for derivatives is disclosed under Note 2.4.5. 

At  initial  recognition,  the  financial  guarantees  are  recognised  at  fair  value  corresponding  to  the  Net  Present  Value  (NPV)  of  expected 
premium  inflows  and  initial  expected  loss.  This  calculation  is  performed  at  the  starting  date  of  each  transaction  and  is  recognised  on  the 
statement of financial position as “Financial guarantees” under “other assets” and “other liabilities”.  

Subsequent to initial recognition, the Facility’s liabilities under such guarantees are measured at the higher of:  

- 

- 

the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with IAS 18 Revenue 
and  

the  best  estimate  of  expenditure  required  to  settle  any  present  financial  obligation  arising  as  a  result  of  the  guarantee,  in 
accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. 

The best estimate of expenditure is determined in accordance with IAS 37. Financial guarantee provisions correspond to the cost of settling 
the obligation, which is the expected loss, estimated on the basis of all relevant factors and information existing at the statement of financial 
position date. 

When a financial guarantee operation measured under IAS 39 is derecognised and treated under IAS 37, its value previously recorded under 
“Other liabilities” is transferred to the caption “Provisions for guarantees issued” on the statement of financial position. 

The provision for financial guarantees (as measured per IAS 37) is recognised in the statement of profit or loss and other comprehensive 
income under “Change in provisions for guarantees, net of reversals”.  

The premium received is recognised in the statement of profit or loss and other comprehensive income in “Fee and commission income” on 
the basis of an amortisation schedule in accordance with IAS 18 over the life of the financial guarantee. 

In  addition,  when  a  guarantee  agreement  is  signed,  it  is  presented  as  a  contingent  liability  for  the  Facility  and  when  the  guarantee  is 
engaged, as a commitment for the Facility. 

2.4.4   

Impairment of financial assets 

The Facility assesses at each statement of financial position date whether there is any objective evidence that a financial asset is impaired. A 
financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of 
one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on 
the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment 
may  include  indications  that  the  borrower  or  a  group  of  borrowers  is  experiencing  significant  financial  difficulty,  default  or  delinquency  in 
interest or principal payments, the probability that they will enter into bankruptcy or other financial reorganisation and where observable data 
indicate  that  there  is  a  measurable  decrease  in  the  estimated  future  cash  flows,  such  as  changes  in  arrears  or  economic  conditions  that 
correlate with defaults. 

For the loans outstanding at the end of the financial year and carried at amortised cost, impairments are made when presenting objective 
evidence of risks of non-recovery of all or part of their amounts according to the original contractual terms or the equivalent value. If there is 
objective  evidence  that  an  impairment  loss  has  been  incurred,  the  amount  of  the  loss  is  measured  as  the  difference  between  the  assets 
carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced through the use of an 
allowance  account  and  the  amount  of  the  loss  is  recognised  in  the  statement  of  profit  or  loss  and  other  comprehensive  income.  Interest 
income continues to be accrued on the reduced carrying amount based on the effective interest rate of the asset. Loans together with the 
associated  allowance  are  written  off  when  there  is  no  realistic  prospect  of  future  recovery.  If,  in  a  subsequent  year,  the  amount  of  the 
estimated  impairment  loss  increases  or  decreases  because  of  an  event  occurring  after  the  impairment  was  recognised,  the  previously 
recognised impairment loss is increased or reduced by adjusting the allowance account. 

The Facility conducts the credit risk assessments based on each individual operation and does not consider a collective impairment.  

For  the  available-for-sale  financial  assets,  the  Facility  assesses  at  each  statement  of  financial  position  date  whether  there  is  objective 
evidence  that  an  investment  is  impaired.  Objective  evidence  would  include  a  significant  or  prolonged  decline  in  the  fair  value  of  the 
investment below its costs. Where there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition 
cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of profit or loss and other 
comprehensive income) is removed from contributors’ resources and recognised in the statement of profit or loss and other comprehensive 

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income.  Impairment  losses  on  available-for-sale  financial  assets  are  not  reversed  through  the  statement  of  profit  or  loss  and  other 
comprehensive income; increases in their fair value after impairment are recognised directly in contributors’ resources. 

The  European  Investment  Bank’s  Risk  Management  reviews  financial  assets  for  impairment  at  least  once  a  year.  Resulting  adjustments 
include the unwinding of the discount in the statement of profit or loss and other comprehensive income over the life of the asset, and any 
adjustments required in respect of a reassessment of the initial impairment. 

2.4.5   

Derivative financial instruments 

Derivatives  include  cross  currency  swaps,  cross  currency  interest  rate  swaps,  short  term  currency  swaps  (“FX  swaps”)  and  interest  rate 
swaps. 

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency 
forward contract with a view to hedge its currency positions, denominated in actively traded currencies other than the Euro, in order to offset 
any gain or loss caused by foreign exchange rate fluctuations. 

The Facility does not use any of the hedge possibilities under IAS 39. All derivatives are measured at fair value through the profit or loss and 
are reported as derivative financial instruments. Fair values are derived primarily from discounted cash-flow models, option-pricing models 
and from third party quotes. 

Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. 
Changes in the fair value of derivative financial instruments are shown in the statement of profit and loss and other comprehensive income 
under “Fair value change of derivative financial instruments”. 

Derivatives are initially recognised using the trade date basis. 

2.4.6   

Contributions 

Contributions from Member States are recognised as receivables in the statement of financial position  on the date of the Council Decision 
fixing the financial contribution to be paid by the Member States to the Facility. 

The Member States contributions meet the following conditions and are consequently classified as equity: 

- 

- 

- 

- 

- 

as defined in the contribution agreement, they entitle the Member States to decide on the utilisation of the Facility’s net assets in 
the events of the Facility’s liquidation; 

they are in the class of instruments that is subordinated to all other classes of instruments; 

all financial instruments in the class of instruments that are subordinated to all other classes of instruments have identical features; 

the instrument does not include any features that would require classification as a liability; and 

the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in 
the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Facility over the life 
of the instrument. 

2.4.7   

Interest income on loans 

Interest on loans originated by the Facility is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar 
income’) and on the statement of financial position (‘Loans and receivables’) on an accrual basis using the effective interest rate, which is the 
rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the net carrying amount of the 
loan. Once the recorded value of a loan has been reduced due to impairment, interest income continues to be recognised using the original 
effective interest rate applied to the new carrying amount. 

Commitment  fees  are  deferred  and  recognised  in  income  using  the  effective  interest  method  over  the  period  from  disbursement  to 
repayment  of  the  related  loan,  and  are  presented  in  the  statement  of  profit  or  loss  and  other  comprehensive  income  within  interest  and 
similar income. 

2.4.8   

Interest subsidies and technical assistance 

As part of its activity, the Facility manages interest subsidies and technical assistance on behalf of the Member States. 

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The  part  of  the  Member  States  contributions  allocated  to  the  payment  of  interest  subsidies  and  TA  is  not  accounted  for  in  the  Facility’s 
contributors’ resources but is classified as amounts owed to third parties. The  Facility operates the disbursement to the final beneficiaries 
and then decreases the amounts owed to third parties. 

When amounts contributed with regard to interest subsidies and TA are not fully granted, they are reclassified as contribution to the Facility. 

2.4.9   

Interest income on cash and cash equivalents 

Interest income on cash and cash equivalents is recognised in the statement of profit or loss and other comprehensive income of the Facility 
on an accrual basis. 

2.4.10 

Fees, commissions and dividends 

Fees received in respect of services provided over a period of time are recognised as income as the services are provided, while fees that 
are  earned  on  the  execution  of  a  significant  act  are  recognised  as  income  when  the  significant  act  has  been  completed.  These  fees  are 
presented in the statement of profit or loss and other comprehensive income within fee and commission income.  

Dividends relating to available-for-sale financial assets are recognised when received and presented in the statement of profit or loss and 
other comprehensive income within net realised gains on available-for-sale financial assets. 

2.5  Taxation 

The Protocol on the Privileges and Immunities of the European Union, appended to the treaty on the European Union and the treaty of the 
functioning of the European Union, stipulates that the assets, revenues and other property of the Institutions of the Union are exempt from all 
direct taxes. 

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3  Risk Management 

This note presents information about the Facility’s exposure to and its management and control of credit and financial risks, in particular the 
primary risks associated with its use of financial instruments. These are: 

- 

- 

credit  risk  –  the  risk  of  loss  resulting  from  client  or  counterparty  default  and  arising  on  credit  exposure  in  all  forms,  including 
settlement risk; 

liquidity  risk  –  the  risk  that  an  entity  is  not  able  to  fund  increases  in  assets  and  meet  obligations  as  they  come  due,  without 
incurring unacceptable losses; 

-  market risk – the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will 

affect an entity’s income or the value of its holdings in financial instruments. 

3.1  Risk management organisation 

The European Investment Bank adapts its risk management on an ongoing basis. 

The Risk Management of EIB independently identifies, assesses, monitors and reports the risks to which the Facility is exposed. Within a 
framework  whereby  the  segregation  of  duties  is  preserved,  the  Risk  Management  is  independent  of  the  Front  Offices.  At  EIB  level  the 
Director General of Risk Management reports for risk matters to the designated Vice-President for Risk Management. The designated Vice-
President  is  responsible  for  overseeing  risk  reporting  to  the  European  Investment  Bank’s  Management  Committee  and  the  Board  of 
Directors. 

3.2  Credit risk 

Credit  risk  is  the  potential  loss  that  could  result  from  client  or  counterparty  default  and  arising  on  credit  exposure  in  all  forms,  including 
settlement. 

3.2.1 

Credit risk policy 

In carrying out the credit analysis on loan counterparts, EIB assesses the credit risk and expected loss with a view to quantify and price the 
risk.  EIB  has  developed  an  Internal  Rating  Methodology  (IRM)  to  determine  the  Internal  Ratings  of  its  credit-relevant  borrower/guarantor 
counterparts.  The  methodology  is  based  on  a  system  of  scoring  sheets  tailored  for  each  major  credit  counterpart  type  (e.g.  Corporates, 
Banks, Public Sector Entities, etc). Taking into consideration both, Best Banking Practice and the principles set under the Basel International 
Capital  Accord  (Basel  II),  all  counterparts  that  are  material  to  the  credit  profile  of  a  specific  transaction  are  classified  into  internal  rating 
categories using the IRM for the specific counterpart type. Each counterpart is assigned an Internal Rating reflecting its probability of default 
foreign  currency  rating  following  an  in-depth  analysis  of  the  counterpart’s  business  and  financial  risk  profile  and  its  country  risk  operating 
context. 

The  credit  assessment  of  project  finance  and  other  structured  limited  recourse  operations  is  using  credit risk tools relevant for the  sector, 
focused  mainly  on  cash  flow  availability  and  debt  service  capacity.  These  tools  include  the  analysis  of  projects’  contractual  framework, 
counterpart’s analysis and cash flow simulations. Similarly to corporates and financial institutions, each project is assigned an internal risk 
rating. 

All Internal Ratings are monitored over loan life, and periodically updated.  

All non-sovereign (or non sovereign guaranteed/assimilated) operations are subject to specific transaction-level and counterpart size limits. 
Counterpart limits are set at consolidated group exposure level, where applicable. Such limits typically reflect e.g. the size of counterparts 
own funds. 

In order to mitigate credit risk the EIB uses, where appropriate and on a case by case basis, various credit enhancements which are: 

- 

- 

Counterparty or project related securities (e.g., pledge over the shares; pledge over the assets; assignment of rights; pledge over 
the accounts); or/and 

guarantees, generally provided by the sponsor of the financed project (e.g., completion guarantees, first demand guarantees) or 
bank guarantees. 

The Facility does not use any credit derivatives to mitigate credit risk. 

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3.2.2 

Maximum exposure to credit risk without taking into account any collateral and other credit enhancements 

The  following  table  shows  the  maximum  exposure  to  credit  risk  for  the  components  of  the  statement  of  financial  position,  including 
derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral. 

Maximum exposure (in EUR’000) 

ASSETS 

Cash and cash equivalents 

Derivative financial instruments 

Loans and receivables 

Amounts receivable from contributors 

Held-to-maturity financial assets 

Other assets 

Total assets 

OFF BALANCE SHEET 

Contingent liabilities 

- Signed non-issued guarantees 

Commitments 

- Un-disbursed loans 

- Issued guarantees 

Total off balance sheet 

Total credit exposure 

31.12.2016 

31.12.2015 

360,817 

6,920 

448,995 

311 

1,729,380 

1,460,057 

86,395 

169,398 

345 

-  

228,521 

27 

2,353,255 

2,137,911 

35,337 

10,000 

901,899 

8,627 

945,863 

1,189,564 

798 

1,200,362 

3,299,118 

3,338,273 

3.2.3 

Credit risk on loans and receivables 

3.2.3.1  Credit risk measurement for loans and receivables 

Each and every loan or guarantee undertaken by the Facility benefits from a comprehensive risk assessment and quantification of expected 
loss estimates that are reflected in a Loan Grading (“LG”). Operations under the IFE (as described in Note 23), with the exception 
of  intermediated  loans,  are  not  subject  to  the  Credit  Risk  Policy  Guidelines  and  are  subject  to  a  different  procedure.  LGs  are 
established according to generally accepted criteria, based on the quality of the borrower, the maturity of the loan, the guarantee 
and, where appropriate, the guarantor. 

The loan grading (LG) system comprises the methodologies, processes, databases and IT systems supporting the assessment of credit risk 
in  lending  operations  and  the  quantification  of  expected  loss  estimates.  It  summarises  a  large  amount  of  information  with  the  purpose  of 
offering  a  relative  ranking  of  loans’  credit  risks.  LGs  reflect  the  present  value  of  the  estimated  level  of  the  “expected  loss”,  this  being  the 
product of the probability of default of the main obligors, the exposure at risk and the loss severity in the case of default. LGs are used for the 
following purposes: 

- 

- 

- 

- 

as an aid to a finer and more quantitative assessment of lending risks; 

as help in distributing monitoring efforts; 

as a description of the loan’s portfolio quality at any given date; 

as one input in risk-pricing decisions based on the expected loss. 

The following factors enter into the determination of an LG: 

i) 

The  borrower’s  creditworthiness:  Risk  Management  independently  reviews  borrowers  and  assesses  their  creditworthiness  based  on 
internal  methodologies  and  external  data.  In  line  with  the  Basel  II  Advanced  Approach  chosen,  the  Bank  has  developed  an  internal 
rating  methodology  (IRM)  to  determine  the  internal  ratings  of  borrowers  and  guarantors.  This  is  based  on  a  set  of  scoring  sheets 
specific to defined counterparty types. 

97 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

ii) 

The default correlation: it quantifies the chances of simultaneous financial difficulties arising for both the borrower and the guarantor. 
The  higher  the  correlation  between  the  borrower  and  the  guarantor’s  default  probabilities,  the  lower  the  value  of  the  guarantee  and 
therefore the lower the LG. 

iii) 

The  value  of  guarantee  instruments  and  of  securities:  this  value  is  assessed  on  the  basis  of  the  combination  of  the  issuer’s 
creditworthiness and the type of instrument used. 

iv) 

The contractual framework: a sound contractual framework will add to the loan’s quality and enhance its internal grading. 

v) 

The loan’s duration: all else being equal, the longer the loan, the higher the risk of incurring difficulties in the servicing of the loan. 

A loan’s expected loss is computed by combining the five elements discussed above. Depending on the level of this loss, a loan is assigned 
to one of the following LG classes listed below: 

A  Prime  quality  loans:  there  are  three  sub-categories.  A  comprises  all  EU  sovereign  risks,  i.e.  loans  granted  to  or  fully,  explicitly  and 
unconditionally guaranteed by Member States, where no repayment difficulties are expected and for which an unexpected loss of 0% is 
allocated. A+ denotes loans granted to (or guaranteed by) entities other than Member States, with no expectation of deterioration over 
their  duration.  A-  includes  those  lending  operations  where  there  is  some  doubt  about  the  maintenance  of  their  current  status  (for 
instance  because  of  a  long  maturity,  or  for  the  high  volatility  of  the  future  price  of  an  otherwise  excellent  collateral),  but  where  any 
downside is expected to be quite limited. 

B  High quality loans: these represent an asset class with which the bank feels comfortable, although a minor deterioration is not ruled out 

in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring. 

C  Good quality loans: an example could be unsecured loans to solid banks and corporates with a 7-year bullet, or equivalent amortising, 

maturity at disbursement. 

D 

E 

This rating class represents the borderline between “acceptable quality” loans and those that have experienced some difficulties. This 
watershed  in  loan  grading  is  more  precisely  determined  by  the  sub-classifications  D+  and  D-.  Loans  rated  D-  require  heightened 
monitoring. 

This LG category includes loans with a risk profile greater than generally accepted. It also includes loans which in the course of their 
lives  have  experienced  severe  problems  and  their  sliding  into  a  situation  of  loss  cannot  be  excluded.  For  this  reason,  the  loans  are 
subject to close and high monitoring. The sub-classes E+ and E- differentiate the intensity of this special monitoring process, with those 
operations graded E- being in a position where there is a strong possibility that debt service cannot be maintained on a timely basis and 
therefore some form of debt restructuring is required, possibly leading to an impairment loss. 

F 

F (fail)  denotes  loans  representing  unacceptable  risks.  F-  graded  loans  can  only  arise  out  of  outstanding  transactions  that  have 
experienced,  after  signature,  unforeseen,  exceptional  and  dramatic  adverse  circumstances.  All  operations  where  there  is  a  loss  of 
principal to the Facility are graded F and a specific provision is applied. 

Generally, loans internally graded D- or below are placed on the Watch List. However, if a loan was originally approved with a risk profile of 
D-  or  weaker,  it  will  only  be  placed  on  the  Watch  List  as  a  result  of  a  material  credit  event  causing  a  further  deterioration  of  its  LG 
classification. 

The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described 
above. 

98 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3.2  Analysis of lending credit risk exposure 

Annual accounts of the European Development Fund 2016 

The  following  table  shows  the  maximum  exposure  to  credit  risk  on  loans  signed  and  disbursed  by  nature  of  borrower  taking  into  account 
guarantees provided by guarantors: 

At 31.12.2016 

In EUR’000 

Banks 

Corporates 

Public institutions 

States 

Total disbursed 

Signed not disbursed 

At 31.12.2015 

In EUR’000 

Banks 

Corporates 

Public institutions 

States 

Total disbursed 

Signed not disbursed 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 

22,691 

110,849 

38,330 

- 

171,870 

94,976 

34,597 

97,213 

- 

3,764 

933,609 

320,406 

- 

167,921 

990,897 

528,468 

38,330 

171,685 

135,574 

1,421,936 

1,729,380 

- 

806,923 

901,899 

57% 

31% 

2% 

10% 

100% 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 

18,964 

37,431 

37,112 

- 

93,507 

135,821 

73,670 

89,170 

- 

4,295 

167,135 

- 

758,412 

272,186 

14 

168,803 

1,199,415 

1,053,743 

851,046 

398,787 

37,126 

173,098 

1,460,057 

1,189,564 

58% 

27% 

3% 

12% 

100% 

Transaction  Management  and  Restructuring  is  tasked  with  the  responsibility  of  performing  borrower  and  guarantor  monitoring,  as  well  as 
project-related  financial  and  contractual  monitoring.  Thus,  the  creditworthiness  of  the  Facility’s  loans,  borrowers  and  guarantors  are 
continually  monitored,  at  least  annually  but  more  frequently  on  an  as-needed  basis  and  as  a  function  of  credit  events  taking  place.  In 
particular,  Transaction  Management  and  Restructuring  reviews  if  contractual  rights  are  met  and,  in  case  of  a  rating  deterioration  and/or 
contractual  default,  remedy  action  is  taken.  Mitigation  measures  are  pursued,  whenever  necessary  in  accordance  with  the  credit  risk 
guidelines. Also, in case of renewals of bank guarantees received for its loans, it is ensured that these are replaced or action is taken in a 
timely manner. 

99 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.2.3.3  Credit quality analysis per type of borrower 

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2016 and 31 December 2015 by the Loan 
Grading applications, based on the exposure signed (disbursed and un-disbursed): 

At 31.12.2016 

In EUR’000 

 High Grade  

 Standard 
Grade  

 Min. 
Accept. Risk 

 High Risk    No grading 

 Total   % of Total 

A to B-  

C  

D+  

 D- and 
below 

Banks 

94,081 

53,970 

315,524 

1,038,705 

126,951 

1,629,231 

Borrower 

Corporates 

125,810 

Public institutions 

States 

- 

- 

- 

- 

- 

19,389 

393,877 

152,355 

691,431 

38,330 

- 

18,131 

254,156 

- 

- 

38,330 

272,287 

62% 

26% 

1% 

11% 

Total 

219,891 

53,970 

391,374 

1,686,738 

279,306 

2,631,279 

100% 

At 31.12.2015 

In EUR’000 

 High Grade  

 Standard 
Grade  

 Min. 
Accept. Risk 

 High Risk    No grading 

 Total   % of Total 

A to B-  

C  

D+  

 D- and 
below 

Banks 

92,260 

31,558 

326,635 

990,971 

245,160 

1,686,584 

Borrower 

Corporates 

125,963 

Public institutions 

States 

- 

- 

- 

- 

- 

12,493 

450,045 

37,112 

40,014 

9,277 

288,133 

- 

- 

- 

588,501 

77,126 

297,410 

64% 

22% 

3% 

11% 

Total 

218,223 

31,558 

385,517 

1,769,163 

245,160 

2,649,621 

100% 

100 

 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
Annual accounts of the European Development Fund 2016 

3.2.3.4  Risk concentrations of loans and receivables 

3.2.3.4.1 

Geographical analysis 

Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000): 

Country of borrower 

31.12.2016 

31.12.2015 

Kenya 

Nigeria 

Uganda 

Tanzania 

Jamaica 

Burundi 

Mauritania 

Dominican Republic 

Togo 

Ethiopia 

Congo (Democratic Republic) 

Ghana 

Cameroon 

Mauritius 

Rwanda 

Cape Verde 

Mozambique 

French Polynesia 

Senegal 

Regional-ACP 

Malawi 

Cayman Islands 

Zambia 

Botswana 

Haiti 

Barbados 

Samoa 

Mali 

Burkina Faso 

Congo 

Vanuatu 

New Caledonia 

Seychelles 

Palau 

Liberia 

South Africa 

Micronesia 

Trinidad and Tobago 

Niger 

Saint Lucia 

Bahamas 

Tonga 

Angola 

Sint Maarten 

Grenada 

Total 

341,805 

241,547 

175,424 

115,239 

90,237 

87,373 

85,008 

81,230 

64,605 

59,837 

47,122 

45,715 

41,255 

31,518 

29,918 

23,029 

22,389 

21,387 

18,544 

15,640 

11,493 

11,221 

11,079 

7,889 

6,879 

6,809 

6,356 

6,159 

4,480 

3,460 

2,470 

2,191 

2,058 

1,929 

1,759 

1,336 

1,088 

528 

523 

392 

392 

46 

19 

2 

- 

1,729,380 

192,945 

195,290 

178,515 

56,367 

85,278 

40 

94,123 

72,474 

75,387 

67,589 

39,766 

40,439 

51,930 

18,882 

20,466 

24,623 

25,124 

22,095 

10,991 

111,103 

13,030 

- 

8,733 

6,605 

7,071 

- 

6,267 

6,688 

5,967 

5,189 

2,772 

2,705 

468 

2,197 

921 

- 

1,169 

1,010 

1,372 

2,671 

- 

54 

- 

6 

1,735 

1,460,057 

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Annual accounts of the European Development Fund 2016 

3.2.3.4.2 

Industry sector analysis 

The table below analyses the Facility’s loan portfolio by industry sector of the borrower. Operations which are first disbursed to a financial 
intermediary before being disbursed to the final beneficiary are reported under global loans (in EUR’000): 

Industry sector of borrower 

Global loans and agency agreements 

Electricity, coal and others 

Urban development, renovation and transport 

Basic material and mining 

Tertiary and other 

Roads and motorways 

Airports and air traffic management systems 

Food chain 

Waste recuperation 

Materials processing, construction 

Telecommunications 

Total 

31.12.2016 

31.12.2015 

987,242 

277,524 

203,094 

78,849 

67,590 

48,600 

38,330 

13,178 

7,988 

6,964 

21 

658,098 

197,547 

207,773 

88,615 

201,361 

48,165 

37,126 

7,643 

4 

13,719 

6 

1,729,380 

1,460,057 

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Annual accounts of the European Development Fund 2016 

3.2.3.5  Arrears on loans and impairments 

Amounts  in  arrears  are  identified,  monitored  and  reported  according  to  the  procedures  defined  into  the  bank  wide  “Finance  Monitoring 
Guidelines and Procedures”. These procedures are in line with best banking practices and are adopted for all loans managed by the EIB. 

The monitoring process is structured in order to make sure that (i) potential arrears are detected and reported to the services in charge with 
minimum delay; (ii) critical cases are promptly escalated to the right operational and decision level; (iii) regular reporting to EIB management 
and to Member States is provided on the overall status of arrears and on the recovery measures already taken or to be taken. 

The arrears and impairments on loans can be analysed as follows (in EUR’000): 

Carrying amount 

Individually impaired 

Gross amount 

Allowance for impairment 

Carrying amount individually impaired 

Collectively impaired 

Gross amount 

Allowance for impairment 

Carrying amount collectively impaired 

Past due but not impaired 

Past due comprises 

0-30 days 

30-60 days 

60-90 days 

90-180 days 

more 180 days 

Carrying amount past due but not impaired 

Notes 

 7 

Loans and receivables 

Loans and receivables 

31.12.2016 

1,729,380 

31.12.2015 

1,460,057 

119,381 

-117,640 

1,741 

214,232 

-191,046 

23,186 

- 

- 

- 

1,620 

30 

- 

- 

1 

1,651 

- 

- 

- 

1,521 

15 

- 

- 

13 

1,549 

Carrying amount neither past due nor impaired 

1,725,988 

1,435,322 

Total carrying amount loans and receivables 

1,729,380 

1,460,057 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.2.3.6 

Loan renegotiation and forbearance 

The Facility considers loans to be forborne if in response to adverse changes in the financial position of a borrower the Facility renegotiates 
the original terms of the contractual arrangements with this borrower affecting directly the future cash flows of the financial instrument, which 
may result in a loss to the Facility. However, the financial impact of restructuring activities is in general limited to impairment losses, if any, as 
financial neutrality is generally applied by the Facility and reflected in the renegotiated pricing conditions of the operations restructured.  

In the normal course of business, the Loan Grading (LG) of the loans in question would have deteriorated and the  loan would have been 
included  in  the  Watch  List  before  renegotiation.  Once  renegotiated,  the  Facility  will  continue  to  closely  monitor  these  loans.  If  the 
renegotiated payment terms will not recover the original carrying amount of the asset, it will be considered as impaired. The corresponding 
impairment  losses  will  be  calculated  based  on  the  forecasted  cash  flows  discounted  at  the  original  effective  interest  rate.  The  need  for 
impairment  for  all  loans  whose  LG  deteriorated  to  E-  is  assessed  regularly;  all  loans  with  a  LG  of  F  require  impairment.    Once  the  Loan 
Grading of a loan has improved sufficiently, it will be removed from the Watch List in line with the procedures of the Facility. 

Forbearance  measures  and  practices  undertaken  by  the  Facility’s  restructuring  team  during  the  reporting  period  includes  extension  of 
maturity, deferral of capital only, deferral of capital and interest and capitalisation of arrears. Such forbearance measures do not lead to the 
derecognition of the underlying operation.  

Exposures subject to changes in contractual terms which do not affect future cash flows, such as collateral or other security  arrangements 
or the waiver of contractual rights under covenants, are not considered as forborne and hence those events are not considered as sufficient 
to indicate impairment on their own. 

Operations subject to forbearance measures are reported as such in the table below: 

In EUR’000 

Number of operations subject to forbearance practices 

Carrying values 

of which impaired 

Impairment recognised 

Interest income in respect of forborn operations 

Exposures written off (following the termination/sale of the operation) 

31.12.2016 

31.12.2015 

22 

171,135 

124,250 

113,052 

19,877 

31,298 

16 

225,631 

204,711 

188,197 

14,262 

- 

Forbearance measures 

In EUR’000 

31.12.2015 

Extension of 
maturities 

Deferral of 
capital only 

Deferral of 
capital and 
interest 

Other 

Contractual 
repayment and 
termination (1) 

31.12.2016 

Banks 

Corporates 

Total 

17,891 

207,740 

225,631 

- 

- 

- 

- 

- 

- 

12,150 

- 

12,150 

8,062 

26,203 

34,265 

-827 

-100,084 

-100,911 

37,276 

133,859 

171,135 

(1) Decreases are explained by repayments of capital occurred during the year on operations already considered as forborne as of 31 December 2015 and by termination 

during the year. 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.2.4 

Credit risk on cash and cash equivalents 

Available funds are invested in accordance with the Facility’s schedule of contractual disbursement obligations. As of 31 December 2016 and 
31 December 2015, investments were in the form of bank deposits, certificates of deposit and commercial papers.  

The  authorized  entities  have  a  rating  similar  to  the  short-term  and  long-term  ratings  required  for  the  EIB’s  own  treasury  placements.  The 
minimum short term rating required for authorised entities is P-1/A-1/F1 (Moody’s, S&P, Fitch). In case of different ratings being granted by 
more  than  one  credit  rating  agency,  the  lowest  rating  governs.  The  maximum  authorized  limit  for  each  authorised  bank  is  currently 
EUR  50,000,000  (fifty  million  euro).  An  exception  to  this  rule  has been  granted  to  Societe  Generale  where  the  Facility  has  its  operational 
cash  accounts.  The  short  term  credit  limit  for  Societe  Generale  as  at  31  December  2016  and  31  December  2015  amounts  to  
EUR  110,000,000  (one  hundred  and  ten  million  euro).  The  increased  limit  applies  to  the  sum  of  the  cash  held  at  the  operational  cash 
accounts and the instruments issued by this counterpart and held by the treasury portfolio. 

All investments have been done with authorised entities with a maximum tenor of three months from value date and up to the credit exposure 
limit. As at 31 December 2016 and 31 December 2015 all term deposits, commercial papers and cash in hand held by the treasury portfolio 
of the Facility had a minimum rating of P-1 (Moody’s equivalent) at settlement day.  

The following table shows the situation of cash and cash equivalents including accrued interest (in EUR’000): 

Minimum short-term 
rating 

Minimum long-term 
rating 

(Moody’s term) 

(Moody’s term) 

P-1 

P-1 

P-1 

P-1 

P-1 

Total 

Aaa 

Aa2 

Aa3 

A1 

A2 

3.2.5 

Credit risk on derivatives 

3.2.5.1  Credit risk policy of derivatives 

31.12.2016 

31.12.2015 

37,949 

46,963 

40,436 

100,012 

135,457 

360,817 

10% 

13% 

11% 

28% 

38% 

100% 

49,999 

26 

- 

115,705 

283,265 

448,995 

11% 

0% 

0% 

26% 

63% 

100% 

The credit risk with respect to derivatives is represented by the loss which a given party would incur where the other counterparty to the deal 
would  be  unable  to  honour  its  contractual  obligations.  The  credit  risk  associated  with  derivatives  varies  according  to  a  number  of  factors 
(such as interest and exchange rates) and generally corresponds to only a small portion of their notional value. 

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency 
forward contracts, with a view to hedge its currency positions denominated in actively traded currencies other than the Euro. All the swaps 
are  executed  by  the  European  Investment  Bank  with  an  external  counterpart.  The  swaps  are  arranged  by  the  same  Master  Swap 
Agreements and Credit Support Annexes signed between the European Investment Bank and its external counterparts.  

3.2.5.2  Credit risk measurement for derivatives 

All the swaps executed by the European Investment Bank that are related to the Facility are treated within the same contractual framework 
and methodologies applied for the derivatives negotiated by the European Investment Bank for its own purposes. In particular,  eligibility of 
swap  counterparts  is  determined  by  the  European  Investment  Bank  based  on  the  same  eligibility  conditions  applied  for  its  general  swap 
purposes. 

The  European  Investment  Bank  measures  the  credit  risk  exposure  related  to  swaps  and  derivatives  transactions  using  the  Net  Market 
Exposure (“NME”) and Potential Future Exposure (“PFE”) approach for reporting and limit monitoring. The NME and the PFE fully include the 
derivatives related to the Investment Facility. 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

 

The following table shows the maturities of cross currency interest rate swaps, sub-divided according to their notional amount and fair 
value: 

Swap contracts at 31.12.2016 

less than 

1 year 

5 years 

more than 

Total 2016 

In EUR’000 

Notional amount 

Fair Value (i.e. net discounted value) 

1 year 

to 5 years 

to 10 years 

to 10 years 

- 

- 

7,430 

-3,051 

- 

- 

- 

- 

7,430 

-3,051 

Swap contracts at 31.12.2015 

less than 

1 year 

5 years 

more than 

Total 2015 

In EUR’000 

Notional amount 

Fair Value (i.e. net discounted value) 

1 year 

to 5 years 

to 10 years 

to 10 years 

- 

- 

9,589 

-3,835 

- 

- 

- 

- 

9,589 

-3,835 

 

 

The  Facility  enters  into  foreign  exchange  short  term  currency  swaps  (“FX  swaps”)  contracts  in  order  to  hedge  currency  risk  on  loan 
disbursements in currencies other than EUR. FX swaps have a maturity of maximum three months and are regularly rolled-over. The 
notional amount of FX swaps stood at EUR 1,611.0 million at 31 December 2016 against EUR 1,400.0 million at 31 December 2015. 
The fair value of FX swaps amounts to EUR -15.3 million at 31 December 2016 against EUR -3.7 million at 31 December 2015. 

The Facility enters into interest rate swap contracts in order to hedge the interest rate risk on loans disbursed. As at 31 December 2016 
there are two interest rate swaps outstanding with a notional amount of EUR 41.2 million (2015: EUR 44.9 million) and a fair  value of 
EUR 0.1 million (2015: EUR -0.3 million). 

3.2.6 

Credit risk on held-to-maturity financial assets 

The following table shows the situation of the held-to-maturity portfolio entirely composed of treasury bills issued by Italy, Portugal and Spain 
with  remaining  maturities  of  less  than  three  months.  EU  Member  States  are  eligible  issuers.  The  maximum  authorized  limit  for  each 
authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the 
investment guidelines and depending on liquidity requirements: 

Minimum short-term 
rating 

Minimum long-term 
rating 

(Moody’s term) 

(Moody’s term) 

31.12.2016 

31.12.2015 

P-1 

P-1 

P-1 

P-2 

P-2 

P-3 

NP 

Non-Rated 

Total 

Aa2 

A1 

A2 

Baa2 

Non-Rated 

Baa3 

Ba1 

Baa2 

10% 

18% 

0% 

0% 

12% 

0% 

30% 

30% 

- 

10,000 

69,502 

50,007 

- 

50,012 

49,000 

- 

0% 

4% 

31% 

22% 

0% 

22% 

21% 

0% 

100% 

228,521 

100% 

18,012 

30,002 

- 

- 

20,025 

- 

50,005 

51,354 

169,398 

106 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
Annual accounts of the European Development Fund 2016 

3.3  Liquidity risk 

Liquidity risk refers to an enitity’s ability to fund increases in assets and meet obligations as they come  due, without incurring unacceptable 
losses. It can be split into funding liquidity risk and market liquidity risk. Funding liquidity risk is the risk that an entity will not be able to meet 
efficiently both expected and unexpected current and future cash flow needs without affecting its daily operations or its financial condition. 
Market liquidity risk is the risk that an entity cannot easily offset or eliminate a position at the market price because of  inadequate market 
depth or market disruption. 

3.3.1 

Liquidity risk management 

The Facility is primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s operations. 
The  Facility  manages  its  funding  liquidity  risk  primarily  by  planning  of  its  net  liquidity  needs  and  the  required  Member  States  annual 
contributions. 

In  order  to  calculate  Member  States’  annual  contributions,  disbursement  patterns  of  the  existing  and  pipelined  portfolio  is  analysed  and 
followed up throughout the year. Special events, such as early reimbursements, sales of shares or default cases are taken into account to 
correct annual liquidity requirements.  

To  further  minimize  the  liquidity  risk,  the  Facility  maintains  a  liquidity  reserve  sufficient  to  cover  at  any  point  in  time  forecasted  cash 
disbursements, as communicated periodically by EIB’s Lending Department. Funds are invested on the money market and bond markets in 
the  form  of  interbank  deposits  and  other  short  term  financial  instruments  by  taking  into  consideration  the  Facility’s  cash  disbursement 
obligations.  The  Facility’s  liquid  assets  are  managed  by  the  Bank’s  Treasury  Department  with  a  view  to  maintain  appropriate  liquidity  to 
enable the Facility to meet its obligations.    

In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the investment 
of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore, the authorisation 
of  counterparts  and  limits  for  treasury  investments,  as  well  as  the  monitoring  of  such  limits,  are  the  responsibility  of  the  Bank’s  Risk 
Management Directorate.  

3.3.2 

Liquidity risk measurement 

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the balance 
sheet date and the contractual maturity date (based on undiscounted cash flows). 

In terms of non-derivative financial liabilities, the Facility holds commitments in form of un-disbursed portions of the credit under signed loan 
agreements,  of  un-disbursed  portions  of  signed  capital  subscription/investment  agreements,  of  loan  guarantees  granted,  or  of  committed 
interest subsidies and TA.  

Loans  under  the  IF  have  a  disbursement  deadline.  However,  disbursements  are  made  at  times  and  in  amounts  reflecting  the  progress  of 
underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence their 
disbursement schedule is subject to a significant degree of uncertainty.  

Capital  investments  become  due  when  and  as  soon  as  equity  fund  managers  issue  valid  calls  for  capital,  reflecting  the  progress  in  their 
investment  activities.  The  drawdown  period  is  usually  of  3  years,  with  frequent  prolongation  by  one  or  two  years.  Some  disbursement 
commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s liquidity 
may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.  

Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding is 
reduced alongside the repayment schedule of guaranteed loans. 

Committed interest subsidies’ cash outflows occur in the case of subsidized loans financed by the Bank’s own resources. Therefore, reported 
outflows represent only commitments related to these loans rather than the total amount of committed un-disbursed interest subsidies. As in 
the case of loans, their disbursement schedule is uncertain.   

Committed  TA  “gross  nominal  outflow”  in  the  “Maturity  profile  of  non-derivative  financial  liabilities”  table  refers  to  the  total  un-disbursed 
portion of signed TA contracts. The disbursement time pattern is subject to a significant degree of uncertainty. Cash outflows classified in the 
“3 months or less” bucket represent the amount of outstanding invoices received by the reporting date.  

Commitments  for  non-derivative  financial  liabilities  for  which  there  is  no  defined  contractual  maturity  date  are  classified  under  “Maturity 
Undefined”. Commitments, for which there is a recorded cash disbursement request at the reporting date, are classified under  the relevant 
time bucket. 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

In  terms  of  derivative  financial  liabilities,  the  maturity  profile  represents  the  contractual  undiscounted  gross  cash  flows  of  swap  contracts 
including cross currency swaps (CCS), cross currency interest rate swaps (CCIRS), short term currency swaps and interest rate swaps. 

Maturity profile of non-derivative financial liabilities 

In EUR’000 as at 31.12.2016 

Outflows for committed but un-disbursed loans 

Outflows for committed investment funds and share subscription 

Others (signed non-issued guarantees, issued guarantees) 

Outflows for committed interest subsidies 

Outflows for committed TA  

Total  

 3 months 
or less 

More than 
3 months 
to 1 year 

More than 
1 year to 5 
years 

More than 
5 years 

Maturity 
Undefined 

82,405 

4,592 

- 

- 

2,671 

89,668 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

819,494 

239,458 

43,964 

275,917 

275,917 

24,807 

27,478 

1,403,640 

1,493,308 

Gross 
nominal 
outflow 

901,899 

244,050 

43,964 

Maturity profile of non-derivative financial liabilities 

In EUR’000 as at 31.12.2015 

Outflows for committed but un-disbursed loans 

Outflows for committed investment funds and share subscription 

Others (signed non-issued guarantees, issued guarantees) 

Outflows for committed interest subsidies 

Outflows for committed TA  

Total  

 3 months 
or less 

More than 
3 months 
to 1 year 

More than 
1 year to 5 
years 

More than 
5 years 

Maturity 
Undefined 

Gross 
nominal 
outflow 

41,028 

23,371 

- 

- 

811 

65,210 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,148,536 

1,189,564 

274,984 

298,355 

10,798 

10,798 

281,682 

281,682 

28,072 

28,883 

1,744,072 

1,809,282 

Maturity profile of derivative financial liabilities 

In EUR’000 as at 31.12.2016 

CCS and CCIRS – Inflows 
CCS and CCIRS – Outflows 
Short term currency swaps – Inflows 
Short term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

Maturity profile of derivative financial liabilities 

In EUR’000 as at 31.12.2015 

CCS and CCIRS – Inflows 
CCS and CCIRS – Outflows 
Short term currency swaps – Inflows 
Short term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

 3 months or 
less 

More than 3 
months to 1 
year 

More than 1 
year to 5 
years 

More than 5 
years 

Gross 
nominal 
inflow/outflow 

3 

- 

1,611,000 

-1,636,001 

411 

- 

-24,587 

2,409 

-3,688 

- 

- 

1,234 

-1,962 

-2,007 

5,222 

-7,377 

- 

- 

5,529 

-5,316 

-1,942 

- 

- 

- 

- 

1,550 

-1,329 

221 

7,634 

-11,065 

1,611,000 

-1,636,001 

8,724 

-8,607 

-28,315 

 3 months or 
less 

More than 3 
months to 1 
year 

More than 1 
year to 5 
years 

More than 5 
years 

Gross 
nominal 
inflow/outflow 

5 

- 

2,307 

-3,571 

7,671 

-10,714 

1,400,000 

-1,407,763 

383 

- 

-7,375 

- 

- 

1,269 

-2,145 

-2,140 

- 

- 

6,059 

-6,127 

-3,111 

- 

- 

- 

- 

2,524 

-2,206 

318 

9,983 

-14,285 

1,400,000 

-1,407,763 

10,235 

-10,478 

-12,308 

108 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.3.3 

Long term financial assets and liabilities 

Annual accounts of the European Development Fund 2016 

The  following  table  sets  out  the  carrying  amounts  of  non-derivative  financial  assets  and  financial  liabilities  expected  to  be  recovered  or 
settled more than 12 months after the reporting date. 

In EUR’000 

31.12.2016 

31.12.2015 

Financial assets: 

Loans and receivables 

Available-for-sale financial assets 

Other assets 

Total  

Financial liabilities: 

Provisions for guarantees issued 

Amount owed to third parties 

Total  

1,692,867 

516,884 

141 

1,423,368 

419,353 

- 

2,209,892 

1,842,721 

497 

69,960 

70,457 

- 

57,346 

57,346 

109 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.4  Market risk 

Market risk represents the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will 
affect an entity’s income or the value of its holdings in financial instruments. 

3.4.1 

Interest rate risk 

Interest  rate  risk  arises  from  the  volatility  in  the  economic  value  of,  or  in  the  income  derived  from,  interest  rate  bearing  positions  due  to 
adverse movements in interest rates.  

The Facility is not directly impacted by the fluctuation of its economic value or to pricing mismatches between different assets, liabilities and 
hedge instruments because (i) it does not have any direct borrowing costs or interest rate bearing  liabilities and (ii) it accepts the impact of 
interest rate fluctuations on the revenues from its investments. 

The Facility measures the sensitivity of its loan portfolio and micro hedging swaps to interest rate fluctuations via a Basis Point Value (BPV) 
calculation. 

The BPV measures the gain or loss in the net present value of the relevant portfolio, due to a 1 basis point (0.01%) increase in interest rates 
tenors ranging within a specified time bucket “money market – up to one year”, “very short – 2 to 3 years”, “short – 4 to 6 years”, “medium – 7 
to 11 years”, “long – 12 to 20 years” or “extra-long – more than 21 years”. 

To determine the net present value (NPV) of the loans’ cash flows denominated in EUR, the Facility uses the EIB’s EUR base funding curve 
(EUR swap curve adjusted with EIB’s global funding spread). The EIB’s USD funding curve is used for the calculation of the NPV of loan’s 
cash flows denominated in USD. The NPV of the loans’ cash flows denominated in currencies for which a reliable and sufficiently complete 
discount curve is not available, is determined by using EIB’s EUR base funding curve as a proxy.  

To calculate the net present value of the micro hedging swaps, the facility uses the EUR swap curve for cash flows denominated in EUR and 
the USD swap curve for cash flows denominated in USD. 

As shown in the following table the net present value of the loan portfolio including related micro-hedging swaps as at 31 December 2016 
would  decrease  by  EUR  516k  (as  at  31  December  2015:  decrease  by  EUR  532k)  if  all  relevant  interest  rates  curves  are  simultaneously 
shifted upwards in parallel by 1 basis point. 

Basis point value 

In EUR’000 

Money 

Market 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

As at 31.12.2016 

1 year 

2 to 3 years 

4 to 6 years 

7 to 11 years  12 to 20 years 

21 years 

Total sensitivity of 
loans and micro 
hedging swaps 

-46 

-101 

-164 

-175 

-30 

- 

-516 

Basis point value 

In EUR’000 

Money 

Market 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

As at 31.12.2015 

1 year 

2 to 3 years 

4 to 6 years 

7 to 11 years  12 to 20 years 

21 years 

Total sensitivity of 
loans and micro 
hedging swaps 

-37 

-72 

-252 

-139 

-32 

- 

-532 

110 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.4.2 

Foreign exchange risk 

Foreign exchange (“FX”) risk for the IF is the risk of loss in earnings or economic value due to adverse movements of FX rates. 

Given a reference accounting currency (EUR for the IF), the Facility is exposed to FX risk whenever there is a mismatch between assets and 
liabilities denominated in a non-reference accounting currency. FX risk also includes the effect of changes in the value of future cash flows 
denominated in non-reference accounting currency, e.g. interest and dividend payments, due to fluctuations in exchange rates. 

3.4.2.1 

Foreign exchange risk and treasury assets 

The IF’s treasury assets are denominated either in EUR or USD. 

FX  risk  is  hedged  by  means  of  FX  cross  currency  spot  or  forward  transactions,  FX  swaps  or  cross-currency  swaps.  The  EIB’s  Treasury 
Department can, where deemed necessary and appropriate, use any other instrument, in line with the Bank’s policy, that provide protection 
against market risks incurred in connection with the IF’s financial activities. 

3.4.2.2 

Foreign exchange risk and operations financed or guaranteed by the IF 

Member States’ IF contributions are received in EUR. The operations financed or guaranteed by the IF as well as interest subsidies can be 
denominated in EUR, USD or any other authorized currency. 

A foreign exchange risk exposure (against the EUR reference currency) arises whenever transactions denominated in currencies other than 
the EUR are left un-hedged. The IF’s foreign exchange risk hedging guidelines are set out below.  

3.4.2.2.1. 

Hedging of operations denominated in USD 

The FX risk generated by IF operations denominated in USD shall be covered on an aggregated basis via the use of USD/EUR FX swaps, 
rolled over and adjusted in terms of amount on a periodic basis. The use of FX swaps serves a dual purpose. On one side the necessary 
liquidity for new disbursements (loans and equity) is generated and on the other side an FX macro hedging is maintained. 

At  the  beginning  of  each  period,  the  cash  flows  to  be  received  or  paid  in  USD  during  the  next  period  shall  be  estimated  on  the  basis  of 
planned or expected reflows/disbursements. Subsequently, the maturing FX swaps shall be rolled over, their amount being adjusted to cover 
at least the USD liquidity needs projected over the next period.  

- 

On  a  monthly  basis,  the  USD  FX  position  shall  be  hedged,  if  exceeding  the  relevant  limits,  by  means  of  a  spot  or  forward 
operation. 

-  Within a roll-over period, unexpected USD liquidity deficits shall be covered by means of ad hoc FX swap operations while liquidity 

surpluses shall either be invested in treasury assets or converted into EUR if occurred from an increase of the FX position. 

3.4.2.2.2. 

Hedging of operations denominated in currencies other than EUR or USD 

- 

- 

IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with 
the same financial profile as the underlying Loan, provided that a swap market is operational. 

IF has operations denominated in currencies for which hedging possibilities are either not efficiently available or available at a high 
cost. These operations are denominated in local currencies (LCs) but settled in EUR or USD. IF’s financial risk framework, which 
was  approved  by  the  IF  Committee  on  22  January  2015,  offers  the  possibility  to  hedge  the  FX  exposure  in  LCs  that  exhibit  a 
significant  positive  correlation  with  the  USD  synthetically  via  USD-denominated  derivatives.  The  LCs  hedged  synthetically  with 
USD  denominated  derivatives  are  reported  in  the  table  in  section  3.4.2.2.3  below  under  item  “Local  currencies  (under  synthetic 
hedge)”,  while  the  LCs  not  hedged  synthetically  with  the  USD  are  reported  in  the  same  table  under  item  “Local  currencies  (not 
under synthetic hedge)”. 

111 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.4.2.2.3 

Foreign exchange position (in EUR’000) 

The tables of this note show the Facility’s foreign exchange position. 

The foreign exchange position is presented in the tables below in accordance with the IF’s Risk Policies (as described in the IF’s financial 
risk framework). The FX position as per Risk Policies is based on accounting figures and defined as the balance between selected assets 
and liabilities. The assets and liabilities defined in the FX position as per Risk Policies are selected so as to ensure that the earnings will only 
be converted into the reporting currency (EUR) when received. 

The unrealised gains/losses and impairment on available-for-sale financial assets are included in the FX position as per Risk Policies, as well 
as impairments on loans and receivables. Derivatives included in the FX position as per Risk Policies are considered at their nominal value 
instead of their fair value, in order to be aligned with the retained value of the assets, considered also at their nominal value adjusted by the 
impairment for loans. 

In  the  tables  below  the  remaining  part  of  the  assets  and  liabilities,  which  includes  mainly  interest  accruals  on  loans,  derivatives  and 
subsidies, is presented as “FX position excluded from Risk Policies”. 

At 31 December 2016 

Assets and liabilities 

Commitments and 
contingent liabilities 

Currencies 

USD 

Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 
HTG, MUR, MZN, XOF, ZMW, 
BWP 

Total non-EUR currencies 

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

-258,496 

7,578 

-250,918 

282,991 

117,881 

97,116 

52,553 

36,776 

22,258 

22,534 

90,622 

3,869 

1,931 

2,013 

1,077 

194 

252 

16,914 

121,751 

99,046 

54,566 

37,854 

22,452 

22,786 

107,537 

- 

- 

- 

- 

- 

246 

283,237 

EUR 

- 

2,591,845 

2,591,845 

1,241,229 

Total EUR and non-EUR 

90,622 

2,608,759 

2,699,382 

1,524,466 

* See section 3.4.2.2.2 for explanations on synthetic hedge. 

112 

 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

At 31 December 2015 

Assets and liabilities 

Commitments and 
contingent liabilities 

Currencies 

USD 

Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 

HTG, MUR, MZN, XOF, ZMW 

Total non-EUR currencies 

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

-207,050 

5,023 

-202,027 

270,236 

129,862 

46,246 

40,799 

30,182 

11,979 

15,474 

67,492 

3,101 

780 

1,274 

565 

164 

201 

11,108 

132,963 

47,025 

42,073 

30,747 

12,143 

15,675 

78,599 

- 

- 

- 

- 

- 

798 

271,034 

EUR 

- 

2,337,555 

2,337,555 

1,579,719 

Total EUR and non-EUR 

67,492 

2,348,663 

2,416,154 

1,850,753 

3.4.2.3 

Foreign exchange sensitivity analysis 

As at 31 December 2016 a 10 percent depreciation of EUR versus  all non EUR currencies  would result in an  increase  of the contributors’ 
resources amounting to EUR 12.0 million (31 December 2015: EUR 8.7 million). A 10 percent appreciation of the EUR versus all non EUR 
currencies would result in a decrease of the contributors’ resources amounting to EUR 9.9 million (31 December 2015: EUR 7.1 million). 

3.4.2.4 

Conversion rates 

The following conversion rates were used for establishing the balance sheet at 31 December 2016 and 31 December 2015: 

31 December 2016 

31 December 2015 

Non-EU currencies 

Botswana Pula (BWP) 

Dominican Republic Pesos (DOP) 

Haitian Gourde (HTG) 

Kenya Shillings (KES) 

Mauritania Ouguiyas (MRO) 

Mauritius Rupees (MUR) 

Mozambican Metical (MZN) 

Rwanda Francs (RWF) 

Tanzania Shillings (TZS) 

Uganda Shillings (UGX) 

United States Dollars (USD) 

Franc CFA Francs (XAF/XOF) 

South Africa Rand (ZAR) 

Zambia Kvacha (ZMW) 

11.2657 

48.7476 

68.78 

108.06 

375.79 

37.85 

75.25 

856.8 

2,296.99 

3,805.00 

1.0541 

655.957 

14.457 

10.4653 

11.9451 

49.0144 

61.19 

111.3 

326.46 

38.85 

50.59 

806.36 

2,344.42 

3,665.00 

1.0887 

655.957 

16.953 

11.9571 

113 

 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

3.4.3 

Equity price risk 

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity prices 
and/or the value of equity investments. 

The IF is exposed to equity price risk via its investments in direct equity and venture capital funds. 

The  value  of  non-listed  equity  positions is  not  readily  available  for  the  purpose  of  monitoring  and  control  on  a  continuous  basis.  For  such 
positions, the best indications available include prices derived from any relevant valuation techniques. 

The effects on the Facility’s contributors’ resources (as a result of a change in the fair value of the available-for-sale equity portfolio) due to a 
+/-10%  change  in  the  value  of  individual  direct  equity  and  venture  capital  investments,  with  all  other  variables  held  constant,  is  
EUR  51.7  million  respectively  EUR  -51.7  million  as  at  31  December  2016  (EUR  41.9  million  respectively  EUR  -41.9  million  as  at  31 
December 2015). 

114 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

4 

Fair values of financial instruments 

4.1  Accounting classifications and fair values 

The  following  table  shows  the  carrying  amounts  and  fair  values  of  financial  assets  and  financial  liabilities,  including  their  levels  in  the  fair  value  hierarchy.  These  do  not  include  fair  value 
information for financial assets and financial liabilities not carried at fair value if the carrying amount is a reasonable approximation of fair value. 

Carrying amount 

Fair value 

Held for 
trading 

Available-
for-sale 

Cash, loans 
and 
receivables 

Held to 
maturity 

Other 
financial 
liabilities 

Total 

Level 1 

Level 2 

Level 3 

Total 

At 31 December 2016 

In EUR’000 

Financial assets carried at fair value: 

Derivative financial instruments  

Venture Capital Funds 

Direct Equity Investments 

Total  

Financial assets not carried at fair value: 

Cash and cash equivalents 

Loans and receivables 

Amounts receivable from contributors 

Bonds 

Other assets 

Total  

6,920 

- 

- 

- 

437,788 

79,096 

6,920 

516,884 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

360,817 

1,729,380 

86,395 

- 

- 

- 

- 

- 

- 

- 

- 

169,398 

345 

- 

2,176,937 

169,398 

Total financial assets 

6,920 

516,884 

2,176,937 

169,398 

Financial liabilities carried at fair value: 

Derivative financial instruments 

Total  

Financial liabilities not carried at fair value: 

Provisions for guarantees issued 

Amounts owed to third parties 

Other liabilities 

Total  

-25,189 

-25,189 

- 

- 

- 

- 

Total financial liabilities 

-25,189 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

115 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

6,920 

437,788 

79,096 

523,804 

360,817 

1,729,380 

86,395 

- 

- 

22,880 

22,880 

6,920 

- 

6,920 

- 

- 

437,788 

437,788 

56,216 

79,096 

6,920 

494,004 

523,804 

-  1,951,786 

-  1,951,786 

169,398 

120,123 

48,031 

- 

168,154 

345 

2,346,335 

120,123  1,999,817 

-  2,119,940 

2,870,139 

-25,189 

-25,189 

- 

- 

-25,189 

-25,189 

- 

- 

-25,189 

-25,189 

-625 

-625 

-116,114 

-116,114 

-2,546 

-2,546 

-119,285 

-119,285 

-119,285 

-144,474 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
Annual accounts of the European Development Fund 2016 

4 

Fair values of financial instruments (continued) 

4.1  Accounting classifications and fair values (continued) 

Carrying amount 

Fair value 

Held for 
trading 

Available-
for-sale 

Cash, loans 
and 
receivables 

Held to 
maturity 

Other 
financial 
liabilities 

Total 

Level 1 

Level 2 

Level 3 

Total 

At 31 December 2015 

In EUR’000 

Financial assets carried at fair value: 

Derivative financial instruments  

Venture Capital Funds 

Direct Equity Investments 

Total  

Financial assets not carried at fair value: 

Cash and cash equivalents 

Loans and receivables 

Bonds 

Other assets 

Total  

311 

- 

- 

- 

396,203 

23,150 

311 

419,353 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

448,995 

1,460,057 

- 

- 

- 

- 

- 

- 

- 

27 

228,521 

- 

1,909,079 

228,521 

Total financial assets 

311 

419,353 

1,909,079 

228,521 

Financial liabilities carried at fair value: 

Derivative financial instruments 

Total  

Financial liabilities not carried at fair value: 

Provisions for guarantees issued 

Amounts owed to third parties 

Other liabilities 

Total  

-8,219 

-8,219 

- 

- 

- 

- 

Total financial liabilities 

-8,219 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

116 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

311 

396,203 

23,150 

419,664 

448,995 

1,460,057 

- 

- 

178 

178 

311 

- 

- 

- 

311 

396,203 

396,203 

22,972 

23,150 

311 

419,175 

419,664 

-  1,649,401 

-  1,649,401 

228,521 

124,009 

104,520 

27 

- 

- 

- 

- 

228,529 

- 

2,137,600 

124,009  1,753,921 

-  1,877,930 

2,557,264 

-8,219 

-8,219 

- 

- 

- 

-8,219 

-8,219 

- 

- 

-8,219 

-8,219 

-101,202 

-101,202 

-2,364 

-2,364 

-103,566 

-103,566 

-103,566 

-111,785 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
Annual accounts of the European Development Fund 2016 

4.2  Measurement of fair values 

4.2.1 

Valuation techniques and significant unobservable inputs 

The table below sets out information about the valuation techniques and significant unobservable inputs used in measuring financial 
instruments, categorised as level 2 and 3 in the fair value hierarchy: 

Valuation technique 

Significant unobservable inputs 

Financial instruments carried at fair value 

Relationship of 
unobservable inputs 
to fair value 
measurement 

Derivative 
financial 
instruments 

Venture Capital 
Fund (VCF) 

Discounted  cash  flow:  Future  cash  flows  are  estimated 
based  on 
(from 
forward  exchange/interest 
observable forward exchange rates and yield curves at the 
end  of  the  reporting  period)  and  contract  forward/interest 
rates,  discounted  at  a  rate  that  reflects  the  credit  risk  of 
various counterparties. 

rates 

Not applicable. 

Not applicable. 

Adjusted  net  assets  method:  The  fair  value  is  determined 
by  applying  either  the  Facility’s  percentage  ownership  in 
the  underlying  vehicle  to  the  net  asset  value  reflected  in 
the  most  recent  report  adjusted  for  cash  flows  or,  where 
available,  the  precise  share  value  at  the  same  date, 
submitted  by  the  respective  Fund  Manager.  In  order  to 
bridge  the  interval  between  the  last  available  Net  assets 
value  (NAV)  and  the  year-end  reporting,  a  subsequent 
event review procedure is performed and if necessary the 
reported NAV is adjusted. 

Adjustment for time elapsed between the 
last  reporting  date  of  the  VCF  and  the 
measurement  date,  taking  into  account: 
operating  expenses  and  management 
fees,  subsequent  changes  in  the  fair 
value  of  the  VCF’s  underlying  assets, 
additional 
incurred,  market 
changes  or  other  economic  condition 
changes. 

liabilities 

The  longer  the  period 
between  the  fair  value 
date 
measurement 
and  the  last  reporting 
date  of  the  VCF,  the 
higher  the  adjustment 
for time elapsed. 

Direct Equity 
Investment 

Adjusted net assets. 

taking 

Adjustment for time elapsed between the 
last  reporting  date  of  the  investee  and 
into 
the  measurement  date, 
account: 
expenses, 
operating 
subsequent  changes  in  the  fair  value  of 
the 
assets, 
additional 
incurred,  market 
changes  or  other  economic  condition 
changes,  capital  increase,  sale/change 
of control. 

underlying 

investee’s 

liabilities 

for 

Discount 
lack  of  marketability 
(liquidity)  determined  by  reference  to 
previous  transaction  prices  for  similar 
equities  in  the  country/region,  ranging 
from 5 to 30%. 

The  longer  the  period 
between  the  fair  value 
date 
measurement 
and  the  last  reporting 
date  of  the  investee, 
the 
the 
higher 
adjustment 
time 
elapsed. 

for 

The 
the 
higher 
marketability  discount, 
fair 
the 
value. 

lower 

the 

Financial instruments not carried at fair value 

Loans and 
receivables 

Discounted  cash 
flows:  The  valuation  model  uses 
contractual  cash  flows  that  are  conditional  upon  the  non-
occurrence  of  default  by  the  debtor  and  do  not  take  into 
account  any  collateral  values  or  early  repayments’ 
scenarios.  To  obtain  the  Net  Present  Value  (NPV)  of  the 
loans,  the  model  retained  discounts  the  contractual  cash 
flows  of  each  loan  using  an  adjusted  market  discount 
curve.  The  individual  loan  NPV  is  then  adjusted  to  take 
into consideration the  relevant associated Expected Loss. 
The  results  are  then  summed  to  obtain  the  fair  value  of 
Loans and receivables. 

Not applicable. 

Not applicable. 

Held-to-maturity 
financial assets 

Discounted cash flows. 

Not applicable. 

Not applicable. 

117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives at 31 December 2016 and 2015, namely: 

- 

- 

4.2.2 

Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR  -76.4k as at  
31 December 2016 and to EUR -121.7k  as at 31 December 2015.  
Debit  valuation  adjustments  (DVA),  reflecting  own  credit  risk  on  derivative  transactions,  amounting  to  EUR  +42.9k  as  at  
31 December 2016 and EUR +64.4k as at 31 December 2015.  
Transfers between Level 1 and 2 

The  Facility’s  policy  is  to  recognise  the  transfers  between  Levels  as  of  the  date  of  the  event  or  change  in  circumstances  that  caused  the 
transfer. 

In 2016 and 2015 the Facility did not make transfers from Level 1 to 2 or Level 2 to 1 of the fair value hierarchy. 

4.2.3 

Level 3 fair values 

Reconciliation of Level 3 fair values 

The following tables present the changes in Level 3 instruments for the year ended 31 December 2016 and 31 December 2015: 

In EUR'000 

Balance at 1 January 2016 

Gains or losses included in profit or loss: 

- net realised gains on available-for-sale financial assets 

- impairment on available-for-sale financial assets  

Total 

Gains or losses included in other comprehensive income: 

- net change in fair value of available-for-sale financial assets 

Total 

Disbursements 

Repayments 

Write offs 

Balance at 31 December 2016 

In EUR'000 

Balance at 1 January 2015 

Gains or losses included in profit or loss: 

- net realised gains on available-for-sale financial assets 

- impairment on available-for-sale financial assets  

Total 

Gains or losses included in other comprehensive income: 

- net change in fair value of available-for-sale financial assets 

Total 

Disbursements 

Repayments 

Write offs 

Balance at 31 December 2015 

118 

Available-for-sale 
financial assets 

419,175 

-6,504 

-2,493 

-8,997 

-24,628 

-24,628 

153,986 

-37,978 

-7,554 

494,004 

Available-for-sale 
financial assets 

401,926 

-33,878 

-2,665 

-36,543 

52,365 

52,365 

67,449 

-64,791 

-1,231 

419,175 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

In 2016 and 2015 the Facility did not make transfers out or to Level 3 of the fair value hierarchy. 

Sensitivity analysis 

A +/- 10 percent change at the reporting date to one of the significant unobservable inputs used to measure the fair values of the Venture 
Capital  Funds  and  Direct  Equity  Investments,  holding  other  inputs  constant,  would  have  the  following  effects  on  the  other  comprehensive 
income: 

At 31 December 2016 

(in EUR’000) 

Direct Equity Investments 

Total 

At 31 December 2015 

(in EUR’000) 

Direct Equity Investments 

Total 

5  Cash and cash equivalents (in EUR’000) 

The cash and cash equivalents are composed of: 

Cash in hand 

Term deposits 

Commercial papers 

Cash and cash equivalents in the statement of financial position 

Accrued interest  

Cash and cash equivalents in the cash flow statement 

6  Derivative financial instruments (in EUR’000) 

Increase 

Decrease 

10 

10 

-10 

-10 

Increase 

Decrease 

31 

31 

-31 

-31 

31.12.2016 

31.12.2015 

51,462 

259,337 

50,018 

360,817 

5 

360,822 

71,405 

290,573 

87,017 

448,995 

3 

448,998 

The main components of derivative financial instruments, classified as held for trading, are as follows: 

At 31 December 2016 

Cross currency interest rate swaps 

Interest rate swaps 

FX swaps 

Total derivative financial instruments 

At 31 December 2015 

Cross currency interest rate swaps 

Interest rate swaps 

FX swaps 

Total derivative financial instruments 

Fair Value 

Assets 

Liabilities 

Notional amount 

- 

388 

6,532 

6,920 

-3,051 

-335 

-21,803 

-25,189 

7,430 

41,233 

1,611,000 

1,659,663 

Fair Value 

Assets 

Liabilities 

Notional amount 

- 

311 

- 

311 

-3,835 

-639 

-3,745 

-8,219 

9,589 

44,913 

1,400,000 

1,454,502 

119 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

7 

Loans and receivables (in EUR’000) 

The main components of loans and receivables are as follows: 

Nominal as at 1 January 2016 

Disbursements 

Write offs 

Repayments 

Interest capitalised 

Foreign exchange rates differences 

Nominal as at 31 December 2016 

Impairment as at 1 January 2016 

Impairment recorded in statement of profit or loss and 
other comprehensive income 

Write offs 

Reversal of impairment 

Foreign exchange rates differences 

Global loans(*) 

Senior loans 

661,792 

476,685 

- 

-178,282 

- 

34,332 

994,527 

-9,403 

-8,794 

- 

360 

-348 

818,007 

51,691 

-109 

-107,259 

- 

2,009 

764,339 

-22,445 

-11,999 

109 

6,100 

-59 

Impairment as at 31 December 2016 

-18,185 

-28,294 

Amortised Cost 

Interest 

-3,906 

14,807 

-3,682 

9,371 

Subordinated 
loans 

Total 

160,555 

1,640,354 

- 

-31,189 

-65,927 

7,183 

941 

71,563 

528,376 

-31,298 

-351,468 

7,183 

37,282 

1,830,429 

-159,198 

-191,046 

- 

-20,793 

31,189 

58,698 

-1,850 

-71,161 

- 

1 

31,298 

65,158 

-2,257 

-117,640 

-7,588 

24,179 

Loans and receivables as at 31 December 2016 

987,243 

741,734 

403 

1,729,380 

(*) including agency agreements 

Nominal as at 1 January 2015 

Disbursements 

Repayments 

Interest capitalised 

Foreign exchange rates differences 

Nominal as at 31 December 2015 

Impairment as at 1 January 2015 

Impairment recorded in statement of  profit or loss and 
other comprehensive income 

Reversal of impairment 

Foreign exchange rates differences 

Impairment as at 31 December 2015 

Amortised Cost 

Interest 

Global loans(*) 

Senior loans 

542,506 

196,607 

-106,921 

- 

29,600 

661,792 

-5,751 

-3,692 

381 

-341 

-9,403 

-3,129 

8,838 

782,563 

86,177 

-96,147 

- 

45,414 

818,007 

-13,491 

-7,576 

57 

-1,435 

-22,445 

-5,781 

10,533 

Subordinated 
loans 

Total 

146,643 

1,471,712 

- 

-2,704 

13,262 

3,354 

282,784 

-205,772 

13,262 

78,368 

160,555 

1,640,354 

-132,895 

-152,137 

-24,995 

-36,263 

1,837 

-3,145 

2,275 

-4,921 

-159,198 

-191,046 

284 

4 

-8,626 

19,375 

Loans and receivables as at 31 December 2015 

658,098 

800,314 

1,645 

1,460,057 

(*) including agency agreements 

120 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

8  Available-for-sale financial assets (in EUR’000) 

The main components of available-for-sale financial assets are as follows: 

Cost as at 1 January 2016 

Disbursements 

Repayments / sales 

Write offs 

Foreign exchange rates differences on repayments / sales 

Cost as at 31 December 2016 

Unrealised gains and losses as at 1 January 2016 

Net change in unrealised gains and losses 

Unrealised gains and losses as at 31 December 2016 

Impairment as at 1 January 2016 

Impairment recorded in statement of profit or loss and other comprehensive 
income during the year 

Write offs 

Impairment as at 31 December 2016 

Venture Capital 
Funds 

Direct Equity 
Investments 

267,331 

101,323 

-37,948 

-4,594 

5,141 

331,253 

153,901 

-24,474 

129,427 

-25,029 

-2,457 

4,594 

-22,892 

22,979 

52,663 

-30 

-2,960 

-16 

72,636 

10,092 

3,365 

13,457 

-9,921 

-36 

2,960 

-6,997 

Total 

290,310 

153,986 

-37,978 

-7,554 

5,125 

403,889 

163,993 

-21,109 

142,884 

-34,950 

-2,493 

7,554 

-29,889 

Available-for-sale financial assets as at 31 December 2016 

437,788 

79,096 

516,884 

Cost as at 1 January 2015 

Disbursements 

Repayments / sales 

Write offs 

Foreign exchange rates differences on repayments / sales 

Cost as at 31 December 2015 

Unrealised gains and losses as at 1 January 2015 

Net change in unrealised gains and losses 

Unrealised gains and losses as at 31 December 2015 

Impairment as at 1 January 2015 

Impairment recorded in statement of profit or loss and other comprehensive 
income during the year 

Write offs 

Impairment as at 31 December 2015 

Venture Capital 
Funds 

Direct Equity 
Investments 

259,784 

63,574 

-64,181 

-1,231 

9,385 

267,331 

149,995 

3,906 

153,901 

-24,534 

-1,726 

1,231 

-25,029 

19,714 

3,875 

-610 

- 

- 

22,979 

6,127 

3,965 

10,092 

-8,001 

-1,920 

- 

-9,921 

Total 

279,498 

67,449 

-64,791 

-1,231 

9,385 

290,310 

156,122 

7,871 

163,993 

-32,535 

-3,646 

1,231 

-34,950 

Available-for-sale financial assets as at 31 December 2015 

396,203 

23,150 

419,353 

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

9  Amounts receivable from contributors (in EUR’000) 

The amounts receivable from contributors are entirely composed of Member States contribution called but not paid. 

10  Held-to-maturity financial assets (in EUR’000) 

The held-to-maturity portfolio is composed of quoted bonds which have a remaining maturity of less than three months at reporting date. The 
following table shows the movements of the held-to-maturity portfolio:  

228,521 

1,159,704 

-1,219,953 

-87 

1,213 

169,398 

99,988 

1,545,550 

-1,417,005 

-12 

228,521 

31.12.2016 

31.12.2015 

1 

344 

345 

1 

26 

27 

31.12.2016 

31.12.2015 

25,884 

399 

26,283 

28,683 

642 

29,325 

Balance as at 1 January 2016 

Acquisitions 

Maturities 

Change in amortisation of premium/discount 

Change in accrued interest  

Balance as at 31 December 2016 

Balance as at 1 January 2015 

Acquisitions 

Maturities  

Change in amortisation of premium/discount 

Balance as at 31 December 2015 

11  Other assets (in EUR’000) 

The main components of other assets are as follows: 

Amount receivable from EIB 

Financial guarantees 

Total other assets 

12    Deferred income (in EUR’000) 

The main components of deferred income are as follows: 

Deferred interest subsidies 

Deferred commissions on loans and receivables 

Total deferred income 

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

13  Provisions for guarantees issued (in EUR’000) 

The amount of provisions for guarantees issued is recognised using the best estimate of expenditure required to settle any present financial 
obligation arising as a result of the guarantees and represents the sum of: 

- 

- 

the amounts initially recognised less, where appropriate, cumulative amortisation recognised in accordance with IAS 18 Revenue 
and 
the  excess  over  the  above  amounts,  as  measured  in  accordance  with  IAS  37  Provisions,  Contingent  Liabilities  and  Contingent 
Assets. 

Balance at 1 January 

Additions recorded in statement of  profit or loss and other comprehensive income 

Utilised 

Transfer from "Other liabilities", financial guarantees  

Release of provision 

Balance at 31 December 

14  Amounts owed to third parties (in EUR’000) 

The main components of amounts owed to third parties are as follows: 

Net general administrative expenses payable to EIB 

Other amounts payable to EIB 

Interest subsidies and TA not yet disbursed owed to Member States 

Total amounts owed to third parties 

15  Other liabilities (in EUR’000) 

The main components of other liabilities are as follows: 

Loan repayments received in advance  

Deferred income from interest subsidies 

Financial guarantees 

Total other liabilities 

2016 

- 

242 

- 

383 

- 

625 

2015 

- 

- 

- 

- 

- 

31.12.2016 

31.12.2015 

43,483 

- 

72,631 

116,114 

43,045 

15 

58,142 

101,202 

31.12.2016 

31.12.2015 

2,081 

458 

7 

2,546 

1,826 

512 

26 

2,364 

123 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

16  Member States Contribution called (in EUR’000) 

Member States 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

United Kingdom 

Total as at 31 December 2016 

Total as at 31 December 2015 

Contribution to 
the Facility 

Contribution to 
interest subsidies 
and technical 
assistance 

Total 
contributed 

Called and not 
paid 

62,223 

91,930 

448 

288 

1,632 

50,420 

160 

35,148 

562,411 

546,115 

30,417 

1,760 

15,665 

299,100 

224 

384 

6,829 

96 

122,895 

4,160 

23,633 

1,184 

672 

576 

145,249 

64,924 

308,457 

2,377,000 

2,157,000 

6,941 

10,222 

182 

117 

663 

5,675 

65 

4,038 

60,332 

60,216 

3,707 

715 

2,074 

34,737 

91 

156 

768 

39 

13,805 

1,690 

2,889 

481 

273 

234 

18,596 

7,485 

37,500 

273,691 

243,691 

69,164 

102,152 

630 

405 

2,295 

56,095 

225 

39,186 

622,743 

606,331 

34,124 

2,475 

17,739 

333,837 

315 

540 

7,597 

135 

136,700 

5,850 

26,522 

1,665 

945 

810 

163,845 

72,409 

345,957 

2,650,691 

2,400,691 

2,410 

5,295 

140 

90 

510 

2,000 

50 

1,470 

19,550 

20,500 

1,470 

- 

910 

12,860 

70 

120 

270 

30 

4,850 

1,300 

1,150 

370 

210 

180 

7,850 

2,740 

- 

86,395 

- 

 (*) On 19 November 2016, the Council fixed the amount of financial contributions to be paid by each Member State by 21 January 2017. As 
at 31 December 2016 EUR 86,395 were not paid in. 

124 

 
 
 
 
 
Annual accounts of the European Development Fund 2016 

17  Contingent liabilities and commitments (in EUR’000) 

Commitments 

Un-disbursed loans 

Un-disbursed commitment in respect of available-for-sale financial assets 

Issued guarantees 

Interest subsidies and technical assistance 

Contingent liabilities 

Signed non-issued guarantees 

31.12.2016 

31.12.2015 

901,899 

244,050 

8,627 

334,553 

1,189,564 

298,355 

798 

352,036 

35,337 

10,000 

Total contingent liabilities and commitments 

1,524,466 

1,850,753 

18 

Interest and similar income and expenses (in EUR’000) 

The main components of interest and similar income are as follows: 

Held-to-maturity financial assets 

Loans and receivables 

Interest subsidies 

Total interest and similar income 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

- 

102,580 

4,118 

106,698 

4 

86,305 

4,076 

90,385 

Included within the line item of “Loans and receivables” under interest income for the year ended 31 December 2016 is a total of EUR 
+15,700 relating to impaired financial assets (31 December 2015: EUR +15,869). 

The main component of interest and similar expenses is as follows: 

Derivative financial instruments 

Cash and cash equivalents 

Held-to-maturity financial assets 

Total interest and similar expenses 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

-1,142 

-752 

-413 

-2,307 

-1,525 

-31 

- 

-1,556 

125 

 
 
 
 
 
 
 
 
   
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

19  Fee and commission income and expenses (in EUR’000) 

The main components of fee and commission income are as follows: 

Fee and commission on loans and receivables 

Fee and commission on financial guarantees 

Other 

Total fee and commission income 

The main component of fee and commission expenses is as follows: 

Commission paid to third parties with regard to available-for-sale financial assets 

Total fee and commission expenses 

20   Net realised gains on available-for-sale financial assets (in EUR’000) 

The main components of net realised gains on available-for-sale financial assets are as follows: 

Net proceeds from available-for-sale financial assets 

Dividend income 

Net realised gains on available-for-sale financial assets  

21  General administrative expenses (in EUR’000) 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

515 

183 

1 

699 

890 

42 

- 

932 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

-48 

-48 

-63 

-63 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

2,159 

4,345 

6,504 

834 

33,044 

33,878 

General  administrative  expenses  represent  the  actual  costs  incurred  by  the  EIB  for  managing  the  Facility  less  income  generated  from 
standard appraisal fees directly charged by the EIB to clients of the Facility. 

Actual cost incurred by the EIB 

Income from appraisal fees directly charged to clients of the Facility 

Total general administrative expenses 

From 01.01.2016 

From 01.01.2015 

to 31.12.2016 

to 31.12.2015 

-45,858 

2,375 

-43,483 

-45,506 

2,461 

-43,045 

126 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

22 

Involvement with unconsolidated structured entities (in EUR’000) 

Definition of a structured entity 

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-
entity. IFRS 12 observes that a structured entity often has some or all of the following features: 

 

 

 

 

Restricted activities; 

A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide 
a  source  of  capital  or  funding  to  an  entity  or  provide  investment  opportunities  for  investors  by  passing  on  risks  and  rewards 
associated with the assets of the structured entity to investors; 

Insufficient equity to permit the structured entity to finance its activities without subordinated financial support; 

Financing  in  the  form  of  multiple  contractually  linked  instruments  to  investors  that  create  concentrations  of  credit  or  other  risks 
(tranches). 

Unconsolidated structured entities 

The  term  'unconsolidated  structured  entities'  refers  to  all  structured  entities  that  are  not  controlled by  the  Facility  and  includes interests  in 
structured entities that are not consolidated. 

Definition of Interests in structured entities: 

IFRS 12 defines "interests" broadly to include any contractual or non-contractual involvement that exposes the reporting entity to variability in 
returns from the performance of the entity.   Examples of such interests include the holding of equity interests and other forms of involvement 
such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other entity. IFRS 12 states that 
a reporting entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship. 

The table below describes the types of structured entities that the Facility does not consolidate but in which it holds an interest. 

Type of 
structured entity 

Project Finance - 
lending to Special 
Purposes Vehicles 
(“SPV”) 

Venture capital 
operations 

Nature and purpose 

Interest held by the Facility 

Project Finance  Transactions (PF Operations) are transactions  where the 
Facility relies for the servicing of its debt on a borrower whose sole or main 
source  of  revenue  is  generated  by  a  single  or  limited  number  of  assets 
being  financed  by  such  debt  or  other  pre-existing  assets  contractually 
linked to the project.  PF operations are often financed through SPV. 

Net disbursed amounts; 

Interest income. 

The Facility finances venture capital and investment funds. Venture capital 
and  investment  funds  pool  and  manage  money  from  investors  seeking 
private  equity  stakes  in  small  and  medium-size  enterprises  with  strong 
growth potential as well as financing infrastructure projects. 

Investments  in  units/shares  issued 
by the venture capital entity; 

Dividends 
income. 

received  as  dividend 

The table below shows the carrying amounts of unconsolidated structured entities in which the Facility has an interest at the reporting date, 
as well as the Facility's maximum exposure to loss in relation to those entities. The maximum exposure to loss includes the carrying amounts 
and the related un-disbursed commitments.  

Type of structured entity 

Caption 

Venture capital funds 

Total 

Available-for-sale financial 
assets 

Carrying 
amount at 
31.12.2016 

Carrying 
amount at 
31.12.2015 

Maximum 
exposure to 
loss at 
31.12.2016 

Maximum 
exposure to 
loss at 
31.12.2015 

437,788 

396,203 

672,222 

645,833 

437,788 

396,203 

672,222 

645,833 

127 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2016 

23 

Impact financing envelope (in EUR’000) 

In  June  2013  the  ACP-EU  Joint  Ministerial  Council  approved  the  new  financial  protocol  for  the  11th  European  Development  Fund  (EDF), 
covering the period 2014-2020.  

A new EUR 500m endowment was agreed for the Investment Facility, the so called ‘impact financing envelope’ or “IFE”, enabling the Facility 
to support projects that promise a particularly high development impact whilst bearing the greater risks inherent in such investments. This 
envelope will present new possibilities for enhancing the Facility’s private sector lending through investments in the following instruments: 

Social  impact  equity  funds  -  promoted  by  an  emerging  population  of  private  equity  fund  managers  who  put  the  alleviation  of  social  or 
environmental issues at the core of their funds' investment strategy but still target sustainability at the levels of both the fund and its investee 
companies. 

Loans to financial intermediaries - (e.g. microfinance institutions, local banks and credit unions) operating in ACP countries in which the 
EIB cannot consider financing - in particular in local currency - under the existing credit risk guidelines, e.g. due to either high country risks, 
currency volatility or lack of pricing benchmarks. The main objective of such loans will be to fund projects with a high developmental impact, 
especially in the field of support to micro and small enterprises (MSEs) and agriculture, which generally do not qualify for IF financing. 

Risk sharing  facilitating instruments -  which will take the form of first loss guarantees ("first loss pieces") that will facilitate risk sharing 
operations of the EIB with local financial intermediaries (mainly commercial banks) for the benefit of underserved SMEs and small projects 
that meet the Impact Financing Criteria in situations where a market gap has been identified in relation to the access of SMEs/small projects 
to finance. The first loss pieces would be structured as a counter-guarantee in favour of senior guarantee tranches funded by the EIB - under 
the  Investment  Facility  -  and  by  other  International  Financial  Institutions/Development  Financial  Institutions,  thus  generating  a  substantial 
leverage effect. 

Direct financing - through debt or equity instruments in projects with sound and experienced promoters and high developmental impacts, 
but that  will, however, also entail higher expectations of losses and difficulties to recover the investment (equity type risk with higher than 
usual expectation of losses). The EIB will apply strict selection and eligibility criteria for this instrument, as these projects, notwithstanding 
their high developmental impact, would not be able to meet acceptable financing criteria (i.e. low expectation of recovering the investment or 
offsetting the losses through interest rates /equity returns). 

The IFE will also allow diversification into new sectors, such as health and education, agriculture and food security, and the development of 
new and innovative risk-sharing instruments. 

From  a  financial  and  accounting  perspective  the  IFE  forms  part  of  the  IF  portfolio  and  is  accounted  for  in  the  overall  IF  annual  financial 
statements. 

The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset: 

Type of IFE investment 

Caption 

Social impact equity funds 

Loans to financial 
intermediaries 

Risk sharing facilitating 
instruments 

Available-for-sale financial 
assets 

Loans and receivables 

Issued guarantees 

Direct financing – equity 
participations 

Available-for-sale financial 
assets 

Total 

24  Subsequent events 

Carrying 
amount at 
31.12.2016 

Carrying 
amount at 
31.12.2015 

Undisbursed 
amount at 
31.12.2016 

Undisbursed 
amount at 
31.12.2015 

5,021 

2,257 

19,567 

16,927 

23,702 

-288 

39,986 

68,421 

- 

- 

- 

46,958 

10,000 

33,719 

- 

2,257 

100,258 

14 

40,000 

66,927 

There  have  been  no  material  post  balance  sheet  events  which  could  require  disclosure  or  adjustment  to  the  31  December  2016  financial 
statements. 

128